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Full text of "The State Department Reports of the State of New York"

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I 




^ ^ * 8TATE LIBRARY ^ 

■If'. 



-%a*^. yi~U. (^S&&) 



Department Reports 

OP THE 

STATE OF NEW YORK 

CONTAINING THE 

DECISIONS, OPINIONS AND RUUNGS 

OP THE 

State Officers, Departments, Boards 

and Commissions 

AND 

MESSAGES OF THE GOVERNOR 



OFFICIAL EDITION 

WILLIAM V. R. ERVING, Miscellaneous Report* 



VOLUME 20 



ALBANY 
J. B. LYON COMPANY, PUBLISHERS 

1919 



DOCUMtMTt 

N. V. p l# 

July iua 

327041 



INDEX 



PAGE 

State Officials xxi 

PUBLIC SERVICE COMMISSION 

First District 

Bronx Gas and Electric Company, In the matter of the complaint of 
Frank Rossomagno against, as to alleged refusal to furnish electric 
service to the premises No. 1653 Barnes avenue in the borough of 
The Bronx, New York city. 

Electric service — extension of wires for domestic use — method of 
adjusting cost of extension .• 

Brooklyn Heights Railroad Company, Brooklyn, Queens County and Sub- 
urban Railroad Company, Coney Island and Gravesend Railway Com- 
pany, Coney Islarid and Brooklyn Railroad Company and the Nassau 
Electric Railroad Company, In the matter of the hearing on the 
motion of the Commission, concerning the regulations, practices and 
service of, on their respective lines of street surface railroad. 

Standards and schedules of service 3 

Commission, In the matter of the hearing on the motion of the, con- 
cerning the regulations, practices and service of The Brooklyn Heights 
Railroad Company, Brooklyn, Queens County and Suburban Railroad 
Company, Coney Island and Gravesend Railway Company, The Coney 
Island and Brooklyn Railroad Company and The Nassau Electric 
Railroad Company on their respective lines of street surface railroad. 

Standards and schedules qf service 3 

New York Railways Company, In the matter of the application of Job E. 
Hedges, as receiver of, with respect to the sufficiency of the maximum 
rates and fares chargeable upon the system of said company, and for 
an order authorizing a charge of three cents for transfers thereon and 
determining that the resulting charges are just and reasonable. 

Street railways — charge of two cents for transfers reasonable.. 12 

Richmond Light and Railroad Company, In the matter of the hearing 
on the motion of the Commission as to the lawfulness and reasonable- 
ness of a provision of the schedule for electric service of, relative to 
the charge for installing and removing an electric meter on premises 
to be occupied for less than one year. 

Electric lighting — temporary service — charge for installation of 
meters disallowed 1 

m 



It Index 

PAGE 

Rossomagno, Frank, In the matter of the complaint of, against The 
Bronx Gas and Electric Company as to alleged refusal to furnish 
electric service to the premises No. 1653 Barnes avenue in the borough 
of The Bronx, New York city. 

Electric service — extension of wires for domestic use — method 
of adjusting cost of extension 9 

Van Brunt Street and Erie Basin Railroad Company, In the matter of 
the hearing on the application of, for an order granting permission 
to put into effect after five days' notice and publication a tariff sched- 
ule increasing the local cash fare of the company from three cents to 
four cents. 

Street railways — when increase of fare cannot be based upon a 
prospective increase in wages — failure to sustain burden of 
proof under section 29 of the Public Service Commissions Law. . 15 



PUBLIC SERVICE COMMISSION 

Second Distbict 

American Railway Express Company, In the matter of discontinuance of 
Sunday pick-up and delivery service of, and limitation of pick-up serv- 
ice on week days to five o'clock p.m. in the city of Buffalo. 

Express companies — rule eliminating Sunday pick-up service com- 
mended and sustained — rule limiting week day pick-up service 
to 5 p. m. sustained 125 

Blevins, Walter J., In the matter of the petition of, under the Trans- 
portation Corporations Law, for a certificate of public convenience and 
necessity for the operation of a stage route by auto busses in the city 
of Glens Falls (it being also proposed that the route shall be operated 
to the hamlet of Bolton Landing, Warren county). 

Stage line — certificate of convenience and necessity denied to 
competitor 160 

Boston & Maine Railroad — United States Railroad Administration, 
In the matter of practice of, with respect to employees in charge of 
locomotives (under steam) which are being towed by another loco- 
motive alone or in a train. 

Railroads — manning of engines towed under steam 157 

Central Hudson Gas and Electric Company, In the matter of the com- 
plaint, under sections 71 and 72 of the Public Service Commissions 
Law, of consumers of gas in the city of Newburgh, against, as to 
increase in price charged for gas. Also complaint of the company (in 
its answer) asking that the increased price be sustained. 



Index v 

pagb 

Central Hudson Gas and Electric Company, In the matter of the com- 
plaint, under sections 71 and 72 of the Public Service Commissions 
Law, of purchasers of gas in the city of Newburgh, against, as to 
former price charged for gas; increase in price for gas; and as to 
" illuminating power, purity or pressure " of gas furnished. Also com- 
plaint of the company (in its answer) asking that the increased price 
be sustained. 

Central Hudson Gas and Electric Company, In the matter of the com- 
plaint, under sections 71 and 72 of the Public Service Commissions 
Law, of purchasers of gas in the city of Poughkeepsie, against, as to 
increase in price of gas; and as to former price. Also complaint of 
the company (in its answer) asking that the increased price be sus- 
tained. 

Gas companies — return of 7 per cent on investment reasonable — 
increase of rate to consumers from $1.25 to $1.50 per 1,000 cubic 
feet sustained 143 

Columbia and Rensselaer Telephone and Telegraph Company, In the 
matter of the complaint of Edgar Rowe, of Nassau, Rensselaer county, 
against, as to charge made him, in addition to the regular monthly 
rate, for certain telephone calls. 

Telephone rates — order of April 1, 1919, modified. 19 State Dept 
Rep. 188 50 

Corning, In the matter of the complaint under sections 71 and 72, Public 
Service Commissions Law, of George W. Lane, as Mayor of, against 
Crystal City Gas Company as to proposed increase in price of natural 
gas furnished customers. 

Jurisdiction — lack of authority of Commission over foreign corpo- 
ration producing natural gas in sister State — Commission can- 
not discriminate between different classes of consumers as to 
rates 54 

Empire State Railroad Corporation, In the matter of the petition (or 
complaint) of, for consent to increase certain passenger fares in and 
between Syracuse and Oswego and intervening points. 

Interurban fare increases 101 

Fitzgibbons, John, Legislative representative of the Brotherhood of Rail- 
road Trainmen of the State of New York, In the matter of the com- 
plaint of, against United States Railroad Administration; New York 
Central Railroad i(Wallkill Valley Railroad) alleging violations of the 

Full Crew Law (section 54-a, Railroad Law). 

■ 
Railroads — section 54-a of the Railroad Law does not apply to a 

railroad of less than fifty miles in length under lease to a trunk 

line and operated as a branch to the main line 137 



vi • Index 

PAGI 

Friedman, Jacob H., of New York city, In the matter of the complaint of, 
against A. S. Burleson, Postmaster-General, and New York Telephone 
Company, as to discontinuance of telephone service; alleged over- 
charges. 

Telephone companies — dispute as to toll charges — discontinuance 
of service 140 

Jamestown, City of, In the matter of the complaint of, against Warren 
and Jamestown Street Railway Company and Jamestown Street Rail- 
way Company, as to proposed discontinuance of issuance of transfers 
between the railways of said companies. 

Jamestown Street Railway Company, In the matter of the petition of, 
under subdivision 1, section 49, of the Public Service Commissions 
Law, and section 181, Railroad Law, for permission to increase pas- 
senger fare in the city of Jamestown; also as to filing passenger tariff 
on short notice. 

Street railways — increase of fare allowed 149 

New York and Stamford Railway Company, In the matter of the petition 
of, under section 53, Public Service Commissions Law, for approval of 
the exercise of rights under amendments to certain franchises of said 
company from municipalities; also as to filing passenger tariff on short 
notice. 

Street railways — new zoning system and increase of fares ap- 
proved 107 

New York Central Railroad, In the matter of the petition of the United 
States Railroad Administration, as to changes at Akron Falls and 
Pembroke Stations. 

Application for leave to employ caretaker at station instead of 
agent denied — economy in management — the rights and the 
conveniences of the public must be considered as of first impor- 
tance 72 

New York Central Railroad (Wallkill Valley Railroad), United States 
Railroad Administration, In the matter of the complaint of John Fitz- 
gibbons, Legislative representative of the Brotherhood of Railroad 
Trainmen of the State of New York, against, alleging violations of 
the Full Crew Law (section 54-a, Railroad Law). 

Railroads — section 54-a of the Railroad Law does not apply to a 
railroad of less than fifty miles in length under lease to a trunk 
line and operated as a branch to the main line 137 

Niagara Falls, In the matter of the complaint of George W. Whitehead, 
as Mayor of the city of, against Niagara Falls Gaa and Electric Light 
Company, as to gas rates and as to service. 

Gas rates — temporary adjustment at one dollar and ninety cents 
per 1,000 cubic feet less fifteen cents for prompt payment pend- 
ing reorganization of company 77 



IlTDBX Til 

PAOI 

Patchogue Electric Light Company, In the matter of the complaint of, 
against North Shore Electric Light and Power Company, alleging that 
the last named company is unlawfully constructing electric lines. 

Electric light companies— petition of complainant under section 
74 of the Public Service Commissions Law granted 86 

Rensselaer Falls, Village of, St. Lawrence county, In the matter of the 
complaint of residents of, against United States Railroad Administra- 
tion—New York Central Railroad — asking that the station he kept 
open longer hours. 

Increase of wages of station agent no excuse for curtailing serrice 
at railroad station 114 

Rowe, Edgar, of Nassau, Rensselaer county, In the matter of the com- 
plaint of, against Columbia and Rensselaer Telephone and Telegraph 
Company, as to charge made him, in addition to the regular monthly 
rate, for certain telephone calls. 

Telephone rates — order of April i, xoxo, modified. 19 State Dept 
Rep. x*8 

Rutland Railroad Company, In the matter of the petition of, under sec- 
tion 54 of the Railroad Law, as amended by chapter 504 of the Laws of 
1915, for consent to the discontinuance of its Woods Falls Station, 
Clinton county. Renewal of petition — United States Railroad Admin- 
istration. 

Discontinuance of freight serrice conditionally allowed 

Sag Harbor, Village of, In the matter of the complaint of trustees of, 
against Long Island Gas Corporation, as to proposed rates for gas. 

Gas companies — increase in rates allowed 121 

Saratoga SpringB, In the matter of the complaint, under sections 71 and 
72, Public Sendee Commissions Law, of the Mayor of the city of, 
against Adirondack Electric Power Corporation as to prices for gaa 
furnished the public in said city. 

Increase of gas. rates allowed for limited period 6t 

Schenectady Railway Company, In the matter of the passenger tariff 
filed by, designated as its P. S. C, 2 N. Y., No. 22, proposing increased 
fares, rates, charges, etc 

Schenectady Railway Company, In the matter of the petition (or com- 
plaint) of, under subdivision 1, section 49, Public Service Commissions 
Law, and section 181, Railroad Law, for permission to increase certain 
passenger fares. 

Trolley roads — internrban rates — power of Commission to regu- 
late — when system should not be treated as a unit 25 



▼ill IlTDBX 

PAG* 

Schenectady Railway Company, In the matter of passenger tariff filed 
by, designated as its P. S. C. — 2 N. Y. — No. 22, proposing increased 
fares, rates, charges, etc. 

Schenectady Railway Company, In the matter of the petition (or com- 
plaint) of, under subdivision 1 of section 49 of the Public Service 
Commissions Law and section 181 of the Railroad Law, for permission 
to increase certain passenger fares. 

Commutation tickets — order of May so, 1919 (ao State Dept 
Rep. as) modified 119 

South Corinth, Saratoga county, In the matter of the petition of United 
States Railroad Administration — Delaware and Hudson Railroad — 
for consent to the discontinuance of services of agent at said station. 
Application denied — opinion in "Petition of United States Rail- 
road Administration, Boston & Maine Railroad, to discontinue 
the Wayville and Reynolds stations," 19 State Dept. Rep. ao6, 
followed 133 

United States Railroad Administration — Delaware and Hudson Railroad, 
In the matter of the petition of, for consent to the discontinuance of 
services of agent at the South Corinth station on said railroad. 

Application denied — opinion in "Petition of United States Rail- 
road Administration, Boston & Maine Railroad, to discontinue 
the Wayville and Reynolds stations," 19 State Dept. Rep. ao6, 
followed 133 

United States Railroad Administration — Delaware, Lackawanna and 
Western Railroad, In the matter of the complaint of the residents of 
Washington Mills, Chadwicks, Willowvale, Sauquoit, Clayville, Cass- 
ville and Waterville, Oneida County, against, asking for better passen- 
ger train service between said points and the city of Utica, particularly 
a late train at night from Utica. 

Passenger train service — convenience of public — discontinued 
train restored 95 

Watertown, In the matter of the petition of the mayor and common 
council of the city of, under section 91 of the Railroad Law, for an 
order determining that the Court street grade crossing of the New York 
Central Railroad in said city shall be changed to an over-crossing. 

Order of May 10, 1917 (13 State Dept. Rep. 184), modified by 
reason of cost of doing the work having increased fifty per cent. 105 



EDUCATION DEPARTMENT 

Bathrick, Merritt H., In the matter of the appeal of, from the failure of 
district No. 19, town of Rome, Oneida county, to provide academic 
instruction for his son. 

Academic instruction — apportionment of cost of tuition in neigh- 
boring district 172 



Index ix 

PAGE 

Clinton, Town of, Clinton county, N. T., In the matter of the appeal 
from the action of district meetings and the election of trustees in 
district No. 5 of. 

Election of trustees — notice of special meeting — Education Law, 
section 197 203 

Glen Cove, City of, Nassau county, In the matter of the appeal of Anna 
C. Crura, Jane D. MacLallen, Katherine M. Pratt, Rowena H. Sill and 
Ina M. Taylor, from the action of the board of education of, in refus- 
ing to retain them as teachers in the schools of such city. 

Teachers — probationary period — permanent appointment — Edu- 
cation Law, section 87a 105 

Half moon, Town of, In the matter of the appeal from the failure of 
school district No. 0, to provide academic instruction for William S. 
Massie. 

When parent cannot compel payment of excess tuition fee for 
instruction of child in a high school outside the home district. . 180 

Healy, Anne K., In the matter of the appeal of, from the action of the 
board of education of the city of Glen Cove, Nassau county, N. Y. 

Removal of teacher — incompetency must be proved — Education 
Law, section 565 — appeal sustained 193 

Hector, Town of, Schuyler county, In the matter of the appeal from the 
election of trustee in District No. 17 of. 

Election of trustee — when second ballot may be taken 19? 

Leonard, Minnie E., In the matter of the appeal of, relative to the pay- 
ment of teacher's wages. 

Compensation of teachers in country districts 173 

Livingston, Town of, Columbia county, In the matter of the appeal from 
the refusal of district No. 10 of, to provide adequate instruction for 
certain pupils. 

Academic instruction — when district must provide for advanced 
instruction in another district 170 

Millar, Norman W., In the matter of the appeal of, from the failure of 
district No. 1, town of Kortright, Delaware county, to provide ade- 
quate instruction for his daughter. 

Home district not liable for cost of transportation and mainte- 
nance of pupil receiving instruction in advanced subjects in 
another district 178 

Mulling, Kathleen L., In the matter of the appeal of, relative to her 
suspension from her position as teacher in the high schools of the city 
of New York and the failure to renew her license as assistant teacher 
of Spanish. 

When salary may be withheld — when Commissioner of Education 
will not interfere with ruling of acting superintendent of schools 
in not renewing license to teach 175 



z Index 

PAGE 

Murray, Town of, Orleans county, In the matter of the appeal relative 
to the election of a trustee in school district No. 11. 

School district elections must be by ballot — section 227 of the 
Education Law 182 

Otsego, Town of, Otsego county, In the matter of the academic tuition 
of certain pupils in District No. 3 of. 

Children under sixteen years of age at beginning of school year are 
entitled to academic instruction at the expense of the district 
although they become sixteen years of age during the school 
year 186 

Smith, William H., In the matter of the appeal of, relative to payment 
of non-resident academic tuition. 

Pupil not entitled to academic instruction at expense of district 
unless he has passed in all of the preliminary subjects 185 

Union, Town of, Broome county, N. Y., In the matter of the application 
of the board of education of Union Free School District No. 1 of, for 
a decision of the Commissioner of Education of the State of New 
York that there has been a substantial compliance with the provisions 
of the Education Law and ratifying and confirming the acts and pro- 
ceedings of said board of education relative to the issuance and sale of 
the bonds of said district to the amount of $150,000. 

School district bonds — Education Law, section 480, subdivision 7 
— when the word " fixtures " will be deemed to mean permanent 
fixtures — bonds may be issued for permanent fixtures 199 

Van Aiken, Willard N., In the matter of the appeal of, relative to the 
payment of the cost of academic instruction. 

When excess tuition fee not allowed 187 

Van Etten, Town of, Chemung county, In the matter of the transporta- 
tion of children in school district No. 9 of. 

When transportation of children may be discontinued — Hatter 
of appeal, etc., District No. 8, Tioga town and county (19 State 
Dept. Rep. 274) distinguished 189 

Western, Oneida county, In the matter of the appeal of Christopher L. 
Meszler and George B. Oliver, from the action of the annual meeting 
in school district No. 11 of, in respect to the payment of academic 
tuition. 

Tuition fee allowed by State for non-resident academic pupils — 
chapter 368, Laws of 1919 183 

• • * 

ATTORNEY-GENERAL 

Banking Law, In the matter of construing section 223 of, as to trust 
companies organized under the laws of a sister State. 

A foreign trust company cannot act as trustee for the bondholders 
of a domestic corporation under a trust mortgage covering prop- 
erty in this State 246 



Index xi 

« 

FAQS 

Banking Law, In the matter of the construction of, as to the power of 
savings banks to declare dividends upon accounts of $3,000 and upon 
the interest credited on the account. 

A sayings hank may declare dividends on accounts of $3,000 plus 
the dividends thereafter credited on such accounts 243 

Contractor, In the matter of the right of a, to withdraw his bid depos- 
ited with the State Commission of Highways. 

After a bid or proposal for a highway contract has been deposited 
with the State Commission of Highways it cannot be withdrawn, 
even with the consent of the Commission, unless an uninten- 
tional mistake has been made for which a court of equity would 
grant relief. The rules of the Commission are as binding upon 
it as upon the contractor 255 

County Law, In the matter of construing section 12, subdivision 5, of, 
relating to the salary of county treasurer. 

When county treasurer not entitled to fees in addition to his 
salary 207 

education Law, In the matter of construing section 94-a of, added by 
chapter 136 of the Laws of 1919. 

Section 94-a of the Education Law, added by chapter 136 of the 
Laws of 1919, does not affect the power of visitation of the 
State Board of Charities over the New York School for the 
Blind, nor does it take the teachers in that school out of the 
classified civil service 253 

General Business Law, In the matter of construing section 13 of, and 
Public Officers Law, section 3, relative to county sealers of weights and 
measures. 

A county sealer of weights and measures should be a resident of 
that part of the county not included in a city 220 

General Municipal Law, In the matter of construing section 153, sub- 
division 1 of, relative to child welfare 250 

Highway Law and General City Law, In the matter of construing, as to 
the power of a city to exact a license fee. 

License fees are not taxes, and a city ordinance requiring a license 
fee from cartmen applies to motor vehicles and is not in conflict 
with section 282, subdivision 7 of the Highway Law 248 

Highway Law, In the matter of construing section 282 of. 

Convertible cars, such as the Ford " suburban," which may be used 
for carrying passengers or freight or both at the same time, 
should be registered and licensed in accordance with the use to 
which they are or are to be put 258 



zii Index 

PAGE 

Highway Law, In the matter of construing subdivisions 6 and 9 of sec- 
tion 130 and section 132 of, and chapter 459, Laws of 1919, relative 
to highways — termination of highway contracts — change of type, 
requiring new plans and specifications. 

If the Commissioner of Highways decides that the original plans 
and specifications of a contract, terminated pursuant to section 
a of chapter 459 of the Laws of 1919, are inadequate and that 
it would be a waste of the highway funds of the State to com- 
plete the construction of the highway under such plans and 
specifications, he may change the type of construction and pre- 
pare new plans and specifications. The cost of construction, how- 
ever, under the new plans cannot be paid for out of the funds 
appropriated by section 8 of said chapter 459 of the Laws of 1919 
but must be paid for out of the referendum funds available in the 
county wherein the highway is constructed 233 

Military Law, In the matter of construing article III of Naval Appro- 
priation Acts of August 29, 1916, and July 1, 1918, relative to the 
Naval Militia, National Naval Volunteers, the Naval Reserve. 

The transfer by the President, under the Naval Appropriation Act 
of July z, 1918, of the National Naval Volunteers to the Naval 
Reserve, did not affect the status of any members of the Naval 
Militia who were in the National Naval Volunteers, except as 
active duties in the Naval Reserve might interfere with active 
duties in the Naval Militia 214 

Public Officers Law, In the matter of construing section 3 of, and Gen- 
eral Business Law, section 13, relative to county sealers of weights 
and measures. 

A county sealer of weights and measures should be a resident of 
that part of the county not included in a city 220 

Tax Law, In the matter of construing article 10 of, added by chapter 
627 of the Laws of 1919, as to its effect on the tax on mortgages, 
article XI of the Tax Law, and upon secured debts upon which the 
taxes are paid under former article XV of the Tax Law. 

The income from mortgages and " secured debts" is subject to 
the income tax and will not be excluded in the computation of 
gross income 239 

Tax Law, In the matter of construing article 16 of, added by chapter 
627 of the Laws of 1919, as to its effect upon the Investment Tax 
Law, article XV of the Tax Law. 

Payment of the investment tax will not procure exemption from 
the income tax. The only advantage gained in paying the invest- 
ment tax is exemption from the extra five per cent transfer tax 
imposed by section 221-b of the Tax Law 245 

Tax Law, In the matter of construing article 16 of, added by chapter 627 
of the Laws of 1919, as to officials and employees of United States 
Government 230 



Ivdzx xiii 



PACT 

Tax Law, In the matter of construing article 16 of, added by chapter 627 
of the Laws of 1919, as to withholding agents 222, 226, 227 

Tax Law, In the matter of construing section 359, paragraph 2, subdi- 
vision g, of article 16 of, added by chapter 627 of the Laws of 1919, 
as to gross income 229 

Tax Law, In the matter of construing section 359, paragrapli 3, of article 
16 of, added by chapter 627 of the Laws of 1919, as to wages of 
mariners 232 

Tax Law, In the matter of construing section 359, subdivision 3, of 
article 16 of, added by chapter 627 of the Laws of 1919, as to non- 
residents 221 

Trading With the Enemy Act, In the matter of construing section 7, e of. 213 

COMPTROLLER 

Brookhaven, Town of, Suffolk county, In the matter of questions pre- 
sented by the chairman of the board of auditors of, relating to the 
duties of the board in the administration of town affairs 265 

Hempstead, Town of, Nassau county, In the matter of a question sub- 
mitted by the supervisor of, relating to the duty of the supervisor to 
honor a warrant issued by the board of town auditors for the reim- 
bursement of an official for the expense of a trip outside of the town 
in which he was an officer 263 

Income Tax Law, Information relating to the Income Tax Law, article 16 
of the Tax Law, added by chapter 627 of the Laws of 1919 270 

Income Tax Law, Matter relating to the, article 16 of the Tax Law, 
added by chapter 627 of the Laws of 1919 316 

Income Tax Law, Rules and regulations of the State Comptroller, in rela- 
tion to taxes imposed upon and with respect to incomes by chapter 627 
of the Laws of 1919 297 

Public Works, Method of financing cost of — matters relating to Corpo- 
ration Tax, Income Tax, Municipal Accounts, Land and Finance 
Bureaus — general balance sheet for the year 1919 303 

STATE CONSERVATION COMMISSION 

Black River watershed, In the matter of the improvement of 324 

Glenwood water district, In the matter of the application of the board of 
water commissioners of, for approval of its acquisition of a source of 
water supply and of its financial and engineering plans for the con- 
struction of a water supply system. 

Application approved as modified 337 



xiv Index 

PAQX 

Nassau, Village of, In the matter of the application of, for approval of 
its acquisition of a source of water supply and of its financial and 
engineering plans for the construction of a water supply system. 

Application approved as modified 357 

Newark, Village of, In the matter of the application of, for approval of 
its acquisition of a source of water supply and of its financial and 
engineering plans for the construction of a water supply system 323 

Application approved as modified 32G 

Sidney, Village of, In the matter of the application of, for approval of 
its acquisition of the source of water supply and plant property and 
system of the Sidney Water Works Company. 

Application approved as modified 342 

Voorheesville, Village of, In the matter of the application of, for addi- 
tional water supply. 

Application approved as modified 351 

STATE INDUSTRIAL COMMISSION 

Alterman, Morris, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law against A. I. Namm & Son, 
Employer, and Zurich General Accident and Liability Insurance 
Company, Ltd., Insurance Carrier. 

Employee injured in attempting to jump off moving elevator — 
award made 432 

Blank, Simon, In the matter of the claim of, for compensation under the 
Workmen's Compensation Law, against August Tumminelli, Employer. 

Undisclosed principal — when an award may be made against 
agent 380 

Butera, Guiseppe, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Morse Dry Dock and Repair 
Company, Employer and Self-Insurer. 

Presumptions under section 21, Workmen's Compensation Law. . . . 418 

Clark, Charles, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Leprestre Miller Stock 
Farm, Inc., Employer; Travelers' Insurance Company, Insurance Car- 
rier. 

When award for compensation may be rescinded on account of 
mistake of fact 434 

Conant, Minnie, Widow, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, on account of the death of 
Lewis Conant, against Thomas Monk, Jr., Uninsured. 

Place of hiring — act of agent in sister State confirmed — when 
Workmen's Compensation Law covers accident in another State. 414 



Ikdxx 



xt 



PAGB 

Connelly, Minnie, Widow, In the matter of the claim of, for herself and 
minor children, for compensation under the Workmen's Compensation 
Law, on account of the death of John Connelly, against Thomas P. 
McLoughlin, Inc., Employer; Travelers' Insurance Company, Insurance 
Carrier. 

Death from tuberculosis attributed to accidental injury 425 

DiFazio, Anthony, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Lackawanna Bridge Com- 
pany, Employer, and The Employers' Mutual Insurance Company of 
New York, Insurance Carrier. 

Employee injured in attempting to board conveyance while in 
motion which was furnished by employer for the benefit of 
its employees — award made 378 

Doshey, Joseph, in the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Fire Companies Building 
Corporation, Employer; United States Casualty Company, Insurance 
Carrier. 

Paralysis of the face (Bell's Palsy) caused by excessive draft of 
cold air — industrial accident 419 

Eckert, Charles C, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Lalance & Grosjean Manu- 
facturing Company, Employer; Globe Insurance Company, Insurance 
Carrier. 

When award will be sustained although testimony of claimant is 
indefinite 427 

Farrington, Mary L., Widow, In the matter of the claim of, for compen- 
sation under the Workmen's Compensation Law, on account of the 
death of John Farrington, against United States Railroad Adminis- 
tration-Long Island Railroad Company, Employer and Self-Insurer. 

Voluntary help — temporary employment — award made for death 
of workman injured in helping an employee of an employer other 
than his own 365 

Graffe, Felix, In the matter of the claim for compensation under the 
Workmen's Compensation Law, on account of the death of, against Art 
Color Printing Co. 

Atmospheric conditions of workroom aggravating ailment causing 
fall and death — award made 441 

Hajek, Frank, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Knickerbocker Ice Com- 
pany, Self-Insurer. 

Case settled by agreement, reopened and award made 472 



xvi Index 

PAGB 

Hamilton, Viney, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, on account of the death of Marshall 
Hamilton, against John L. Hayes Construction Company, Employer, 
and London Guarantee and Accident Insurance Company, Insurance 
Carrier. 

Insurance — "deposit premium" policy — power of Commission — 
when policy deemed renewed — when termination of insurance 
agency does not affect the relations between the insured and 
the insurer 404 

Haworth, George, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Davis Brown, Inc., Em- 
ployer; Travelers' Insurance Company, Insurance Carrier. 

When intoxication not sole cause of accident — award made — 
Workmen's Compensation Law, section ax, subdivision 4 — place 
of employment . 389 

Hayden, Mary, Widow, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, on account of the death of 
Philip Hayden, against Thomas MacLaren Co., Inc., Employer; Travel- 
ers' Insurance Company, Insurance Carrier. 

Delirium — death resulting from fall from window — section 21, 
subdivision 3, Workmen's Compensation Law 386 

Johnson, Philip, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Faribault Building Cor- 
poration, Employer; Royal Indemnity Company, Insurance Carrier. 

Employee injured in using his motorcycle in taking superintend- 
ent of employer home — claim allowed 453 

Lemmo, Augustino, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against John L. Hayes Construc- 
tion Company, Employer. 

Insurance — u deposit premium* 9 policy — power of Commission — 
when policy deemed renewed — when termination of insurance 
agency does not affect the relations between the insured and 
the insurer 404 

McCaffery, Annie, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against E. I. DuPont De Nemours 
& Company, Inc., Employer and Self-Insurer. 

Resident of State, employed by foreign corporation, injured in sister 
State, entitled to an award 373 

McDermott, Isabel, Widow, In the matter of the claim of, for compensa- 
tion under the Workmen's Compensation Law, against Robert H. Inger- 
soil & Bro., Employer, Uninsured. 

Uninsured employer upon giving surety company bond may con- 
tinue payments bi-weekly 463 



Ikdsx zvii 

PAG« 

Magee, Sophie M. f Widow, In the matter of the claim of, for compensa- 
tion under the Workmen's Compensation Law, on account of the death 
of Thomas Magee, against Pennsylvania Railroad Company, Employer 
and Self-Insurer. 

Cancer — not caused by accident — award denied 423 

Malandrino, Guiseppe, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, against Southern New York 
Power and Railroad Corporation, Insurance Carrier. 

Injury from fire built by employee for his comfort upon hit em- 
ployer's plant — award made 438 

Mandatto, Graziano M., In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, against Hudson Shoring 
Company, Inc., Employer; Travelers' Insurance Company, Insurance 
Carrier. 

When subcontractor may be deemed employee of co-subcontractor 
and entitled to an award for injuries sustained 446 

Minardi, Giovanni, Father, In the matter of the claim of, for compensa- 
sation under the Workmen's Compensation Law, on account of the 
death of Adolpho Minardi, against Acheson Graphite Company, Em- 
ployer; Utica Mutual Compensation Insurance Corporation, Insurance 
Carrier. 

Sufficiency of testimony to prove foreign dependency 461 

Morse, Alton J., In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Willow Brook Dairy, Inc., 
Employer; State Insurance Fund, Insurance Carrier. 

Farm laborer not covered by the Workmen's Compensation Law 
when injured in fixing pipe 392 

Muller, Frieda, Widow, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, on account of the death of 
Charles W. Muller, against the City of New York, Employer and Self- 
Insurer. 

What is not farm labor — Military Law, § 187 376 

Pettey, William, In the matter of the claim, under the Workmen's Com- 
pensation Law, on account of the death of, against St. Regis Paper 
Company, Employer; Travelers' Insurance Company, Insurance Car- 
rier. 

Interpretation of section 15, subdivision 7, of the Workmen's Com- 
pensation Law 450 

Quealy, Elizabeth, Widow, In the matter of the claim of, for herself and 
minor children, for compensation under the Workmen's Compensation 
Law, on account of the death of Austin Quealy, against Pietrowski & 
Konop Company, Employer; Casualty Company of America, Insurance 
Carrier. 

"Pulmonary phthisis" — when not caused by fall 382 



xviii Index 

PACT 

Romano, Ralph, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Siff Brothers, Employer; 
Zurich General Accident and Insurance Company, Insurance Carrier. 

Injury from assault by strikers — half time allowed 430 

Rosenberg, Charles, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, against William Golden- 
blum & Company, Employer; Massachusetts Bonding Company, In- 
surance Carrier. 

Statute of Limitations, section 28, Workmen's Compensation Law 
— when employer not estopped from setting up the statute — 
award denied 469 

Salas, F. Javier, In the matter of the claim of, as Consul-General for 
Spain, in behalf of absent claimant, alleged dependent father, for com- 
pensation under the Workmen's Compensation Law, on account of the 
death of Juan Fernandez Vasquez, against Lackawanna Steel Com- 
pany, Employer; and State Insurance Fund, Insurance Carrier. 

When death by injury does not arise out of and in the course of 
employment 368 

Solomone, Angelina, Widow, In the matter of the claim of, on behalf of 
herself and minor children, for compensation under the Workmen's 
Compensation Law, on account of the death of Leonardo Solomone, 
against Degnon Contracting Company, Employer and Self-Insurer. 

Injury caused by negligence of third person — action prosecuted 
by injured employee in his lifetime and compromised without 
consent of employer is not a bar to the widow's claim for death 
benefits 456 

Stolhoff, Louis, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Louis Asch. 

When failure to give written notice excused — section 18, Work- 
men's Compensation Law, amended by chapter 634, Laws of 1918, 
in effect May 13, 1918 394 

Struzycki, Waclaw, In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against R. W. Smith Contracting 
Company, Employer; United States Fidelity and Guaranty Company, 
Insurance Carrier. 

The amendment to section 18 of the Workmen's Compensation 
Law by chapter 634 of the Laws of 19x8 is retroactive 410 

Sullivan, James H., In the matter of the claim of, for compensation under 
the Workmen's Compensation Law, against Detroit Cadillac Motor 
Car Company, Employer, and Zurich General Accident and Liability 
Insurance Company, Ltd., Insurance Carrier. 

Assault by co-employee — award made 370 



Indd xix 

PAGE 

Sullivan, Jessie, Widow, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, on account of the death of 
George J. Sullivan, against Delaware and Hudson Railroad Company, 
Employer. 

Railroads — when car not engaged in interstate commerce — opin- 
ion in Minneapolis & St Louis Railroad Company v. Winters, 
94a U. S. 358, followed 465 

Taub, Israel, Dependent father, and Annie Taub, dependent mother, In 
the matter of the claim of, for compensation under the Workmen's 
Compensation Law, on account of the death of Max Taub, against 
Empire Fireproof Door Company, Employer, and Allied Mutuals Lia- 
bility Insurance Company, Insurance Carrier. 

Death caused to employee by boarding freight elevator during 
lunch hour after returning from saloon with pail of beer for 
lunch — award made 401 

Watson, Bachael, Widow, In the matter of the claim of, for compensation 
under the Workmen's Compensation Law, on account of the death of 
Doremus Watson, against Estate of Adolph Starke, Employer; United 
States Casualty Insurance Company, Insurance Carrier. 

When employer not prejudiced by failure of written notice of acci- 
dent — section 18, Workmen's Compensation Law as in effect 
prior to its amendment by chapter 634 of the Laws of 1918 395 

Young, Carrie W., Widow, In the matter of the claim of, for compensa- 
tion under the Workmen's Compensation Law, on account of the death 
of William J. Young, against Adams Express Company, American 
Railways Express Company. 

Pulmonary tuberculosis resulting from injury 399 



STATE OFFICIALS 



STATE OFFICIALS 

Corrected to date 
(Address, Albany. N. Y., except where otherwise Indicated) 

1919 



Govsbnob i Alfred B. Smith. 

Secretary to Governor George R. Van Names. 

Counsel to Governor James A. Parsons. 

Adjutant-General Charles W. Berry, 

Military Secretary to Governor Alfred J. Glynn. 

Executive Legal Assistant Owen L. Potter. 

Assistant Secretary to Governor George B. Graves. 

Requisition Clerk John A. Waldron. 

Chief Clerk, Notarial Bureau Joseph A. Wisely, Jr. 

Clerk and Attendant William J. Lamborn. 

LncuTSNANT-GoviBKOB Harry C. Walker. 

SncBBTABT of &TATB FraneJs M. Hugo. 

Deputy Secretary of State Addison B. Parker. 

Second Deputy Secretary of State Charles W. Taft. 

CoirpTBOLLXR Eugene M. Travis. 

Deputy Comptroller William J. Maier. 

Deputy Comptroller James A. Wendell. 

Deputy Comptroller Frederick M. FarweQ. 

Deputy Comptroller (New York office, 233 

Broadway) William Boardman. 

Assistant Deputy Comptroller Edward P. Kearney. 

Assistant Deputy Comptroller Charles H. Mullens. 

Secretary to the Comptroller Charles H. Dora. 

Tbbasubsb James L. Wells. 

Deputy Treasurer James J. Hamilton. 

Cashier Floyd W. Powell. 

Assistant Cashier John J. Caldwell 

Auditor and Paying Teller Isaac Blauvelt. 

Accountant and Transfer Officer Ellsworth Cram* 

Attornby-Gbnebal Charles D. Newton. 

First Deputy Jerome L. Cheney. 

Second Deputy George A. Fisher. 

Third Deputy Arthur E. Rose. 

Deputy E. Clarence Aiken. 

Deputy Edward J. Mone. 

Deputy Wilber W. Chambers. 

Deputy Claude T. Dawes. 

Deputy Edward A. Gilford. 

... 

XXlll 



xxiv State Department Rbpobtb 

Attosmbt-Obhbbal — (Continued). 

Deputy. Henry C. Henderson. 

Deputy P. J. Finn. 

Deputy B. Coe Turner. 

Deputy J. S. Y. Ivins. 

Deputy Rosooe S. Conkling. 

Deputy T. Paul McGannon. 

Deputy Edward G. Griffin. 

Deputy and Investigator of Claims M. Vincent Ryan. 

Deputy Alex. T. Selkirk. 

Deputy , James A. Burnham, Jr. 

Deputy Israel Belanger. 

Deputy (in charge of Title Bureau) Anson Getman. 

Deputy (Title Bureau) John D. Monroe. 

Deputy (Title Bureau) Deland £. Fair. 

Deputy (Title Bureau) Michael F. O'Connor. 

Deputy (Title Bureau) Clarence R. Chimmings. 

Deputy (Title Bureau) Eric J. Lake. 

Deputy (Title Bureau) Patrick H. Chine. 

Deputy (in charge Court of Claims Bureau) . . . Carey D. Davie. 

Deputy George L. Meade. 

Deputy Frank K. Cook. 

Deputy. John H. Clogston. 

Deputy Edward M. Brown. 

Deputy Harry W. Ehle. 

Deputy William E. Thorpe. 

Deputy Henry P. Nevins. 

Deputy James Gibson. 

Deputy Archie C. Ryder. 

Deputy M. H. Quirk. 

Deputy Aaron A. Armatage. 

Deputy Glenn A. Frank. 

Deputy George I. Sleicher. 

Deputy Charles A. Clark. 

Deputy Edwards P. Ward. 

Deputy in Conservation Bureau. A. Frank Jenks. 

Assistant Deputy William T. Moore. 

Assistant Deputy Blaine F. Sturgis. 

Deputy and Title Examiner Eugene E. Howe. 

Chief of Land Bureau Edward H. Leggett. 

Auditor Edward J. Grogan. 

Hearing Stenographer Wm. M. Thomas. 

Land and Opinion Clerk Wm. J. Conway. 

Private Secretary Louis W. Gett. 

Attorney John O. Bates. 

Law Librarian Arthur J. Smith. 

New York Office (51 Chambers Street): 

Deputy (in charge) Robert S. Conklin. 

Deputy Chas. Preseott Robinson. 



J 



State Officials xxv 

Attornbt-Gbneral — (Continued) . 

Deputy Robert P. Beyer. 

Deputy Samuel A. Berger. 

Deputy William J. 8mith. 

Deputy Charles S. Amael. 

Deputy Cortland A. Johnson. 

State Engineer and Surveyor Prank M. Williama. 

Deputy State Engineer Roy G. Finch. 

8pecial Deputy State Engineer Friend P. Williama. 

Confidential Assistant George W. Codwise. 

Senior Assistant Engineer in charge of Eastern 

Division R. S. Greenman. 

Middle Division Engineer , . . Guy Moulton. 

Western Division Engineer L. C. Hulburd. 

Farms and Markets, Department of 

New York Statu Council of Fares and Markets 

C. Fred Boehart Lowville. 

May B. Van Arsdale New York City. 

James H. Killough Brooklyn. 

Lewis L. Morrell Kinderhook. 

Datus Clark Peru. 

Frank W. Howe Syracuse. 

John G. Pembleton Owego. 

William E. Dana Avon. 

William F. Pratt Batavia. 

John Y. Gerow Washingtonvflle. 

Commissioner of Public Markets, New 

York City (ex officio) Dr. Jonathan C. Day. 

Counsel Seward A. Miller. 

Secretary Herbert W. Leversee. 

Division of Agriculture 

Commissioner Charles S. Wilson. 

First Deputy Commissioner Stanton C. Shaver. 

Second Deputy Commissioner Harry B. Winters. 

Counsel George L. Flanders. 

Secretary Walter S. Green. 

Division of Foods and Markets 

Commissioner * Dr. Eugene H. Porter. 

Deputy Albert E. Brown. 

Director of Weights and Measures W. T. White. 

Secretary Frederic E. Foster. 



Architect! State Lewis F. Piloher. 

Executive Deputy State Architect C. A. Sussdorff. 

Assistant State Architect Theodore H. V ought. 

Chief Engineer. • . George B. Nichols. 



xxvi State Department Reports 

Banking, Department of 

Superintendent of Banks George I. Skinner. 

First Deputy Guernsey R. Jewett. 

Second Deputy George Overooker. 

Third Deputy George A. Coleman. 

Fourth Deputy Collin H. Woodward. 

Confidential Clerk and Private Secretary. ... J. Johnson Ray. 

Charities, State Board or 

President William R. Stewart. 

Vice-President William H. Gratwiok. 

Commissioner Lee K. Fcankel. 

Commissioner Victor F. Ridder. 

Commissioner George J. Gillespie. 

Commissioner J. Richard Kevin, M. D. 

Commissioner Mary M. Glynn. 

Commissioner Eleanor W. Higley • 

Commissioner . . . « Ceylon H. Lewis. 

Commissioner Daniel Waite Burdiek. 

Commissioner Lillie Boiler Werner 

Commissioner Henry Marquand. 

Secretary Charles H. Johnson. 

Chief Clerk and Auditor Wellington D. Ives. 

Statistician Ellen L. Tenney. 

Superintendent, Division of Dependent Chil- 
dren James H. Foster. 

Superintendent, Division of Adult Wards Robert W. Hill. 

Superintendent, Division of Mental Defect and 
Delinquency Chester L. Carlisle, M. D. 

Superintendent, Division of Medical Charities Clarence E. Ford. 

Superintendent of Inspection Richard W. Wallace. 

Civil Service, State Commission 

Commissioner William Gorham Rice, President. 

Commissioner John C. Clark. 

Commissioner Frances Smith. 

Secretary John C. Birdseye. 

Assistant Secretary George R. Hitchcock. 

Chief Examiner Harold N. Saxton. 

Claims, Court of 

Presiding Judge Fred M. Ackerson. 

Judge William W. Webb. 

Judge * Sanford W. Smith. 

Judge Charles R. Paris. 

Judge William D. Cunningham. 

Clerk Frederick D. Colson. 

Conservation, Department of 

Commissioner George D. Pratt. 

Deputy Commissioner Alexander Macdonald. 

Secretary Warwick S. Carpenter. 



State Officials xxvii 

Conservation, Dbpartiient of — (Continued) . 

Assistant Secretary John J. FarrelL 

Counsel Marshall McLean. 

Chief, Division of Fish and Game Llewellyn Legge. 

Superintendent, Division of Lands and Forests.. C. R. Pettis. 

Division Engineer A. H. Perkins. 

Superintendent, Division of Saratoga Springs. J. G. Jones. 

Elections, State Superintendent of Henry S. Renaud. 

1£xctse, State Commissioner of Herbert S. Sisson. 

Deputy Commissioner Jay Farrier. 

Deputy Commissioner Clarence W. Davidson. 

Deputy Commissioner Charles V. Piatt. 

Chief Counsel Harry D. Sanders. 

Confidential Clerk Joseph J. Kingsbury. 

Feeble -Minded, State Commission on 

Commissioner Pierce Bailey, M. D., Chairman. 

Commissioner Frank R. Utter, Fiscal Supervisor 

of State Charities (ex officio). 

Ck>mmiasioneT Charles H. Johnson, Secretary, 

State Board of Charities (ex 
officio). 
Psychiatrist. William C. Sawdy, M. D. 

Fiscal Supervisor of State Charities Frank R. Utter. 

Deputy Henry O'Brien. 

Second Deputy Thomas H. Lee. 

Chief Clerk William J. Baier. 

Health, State Department of 

Commissioner Hermann M. Biggs, M. D. 

Deputy Commissioner Matthias Nicoll, Jr., M. D. 

Secretary John A. Smith, M. D. 

Executive Clerk F. D. Beagle. 

Highway Department 

Commissioner of Highways Frederick S. Greene. 

First Deputy Paul Schultze. 

8econd Deputy Irving V. A. Huie. 

Third Deputy . Charles Van Amburgh 

Secretary Royal E. Fuller. 

Auditor S.D.Gilbert. 

Insurance Department 

Superintendent of Insurance Jesse S. Phillips. 

First Deputy Henry D. Appleton. 

8econd Deputy (New York office, 165 Broad- 
way) Francis R. Stoddard, Jr. 

Chief Clerk Edwin M. Cadman. 

Statistician Charles S. Crippen. 

Actuary Charles G. Smith. 

Counsel Hervey J. Drake. 



xxviii State Department Reports 

Insurance Department — (Continued). 
Bureau Chiefs: 

Assessment and Fraternal Corporations. . . Thomas F. Behan. 

Co-operative Fire George E. Merigold. 

Liquidation Bureau C. C. Fowler. 

Fire Companies (New York office, 165 

Broadway) Daniel F. Gordon. 

Life Companies (New York office, 165 

Broadway) Nelson B. Hadley. 

Casualty Companies (New York office. 

165 Broadway) Arthur F. Sazton. 

Fraternal Companies (New York office, 

165 Broadway) John E. Diefendorf. 

Workmen's Compensation (New York 

office, 165 Broadway) William Leslie, Actuary. 

Audit (New York office, 165 Broadway) . . Charles Hughes. 
Underwriters' Associations (New York 

office, 165 Broadway) Samuel Deutschberger. 

Labor, Department or (Administered by State Industrial Commission) 

Chairman Vacant. 

Commissioner James M. Lynch. 

Commissioner Frances Perkins. 

Commissioner Edward P. Lyon. 

Commissioner Henry D. Sayer. 

Secretary Edward W. Buckley. 

Assistant Secretary Charles D. O'Connell. 

Assistant Secretary Victor T. Holland. 

Assistant Secretary Nathaniel J. Rosenberg. 

First Deputy Commissioner in charge of Bu- 
reau of Inspection James L. Geraon. 

Second Deputy Commissioner in charge of 
Workmen's Compensation Bureau William C. Archer. 

Third Deputy Commissioner in charge of 
Mediation and Arbitration Bureau Frank B. Thorn. 

Chief Counsel Bernard L. Shientag. 

Chief Statistician Leonard W. Hatch. 

Director Employment Bureau David S. Flynn. 

Manager, State Insurance Fund F. Spencer Baldwin. 

Law Examiners, Board of 

Examiner Frank Sullivan Smith, President. 

Examiner Franklin M. Danaher, Secretary 

and Treasurer. 
Examiner Edward H. Letch worth. 

Military Training Commission 

Commissioner Major-General John F. O'Ryan, 

Commanding the National 
Guard, Chairman (ex officio). 

Commissioner Dr. George J. Fisher. 

Commissioner Dr. John H. Finley, Commis- 
sioner of Education. 



State Officials xxix 

Military Training Commission — (Continued) . 

Secretary Thomas G. Stowell. 

Military Secretary Capt. Henry C. Perley. 

State Inspector of Physical Training Dr. Thomas A. Storey. 

Supervising Officer of Military Training Brig. -Gen. William H. Chapin. 

Supervising Officer of Vocational Training. . . Howard Q. Burdge. 

Chief Clerk Robert C. Mabel. 

Narcotic Drug Control, Department of 

Commissioner. Walter R. Herrick. 

First Deputy Commissioner Sara Graham Mulhall. 

Second Deputy Commissioner Fred C. Morrill. 

Third Deputy Commissioner John Seeley, M. D. 

Secretary Wm. F. Kearney. 

Prisons, Statb Commission or 

Commissioner Henry Solomon, President. ' 

Commissioner JohnS. Kennedy, Vice-President. 

Commissioner Sarah L. Davenport. 

Commissioner George W. Davids. 

Commissioner Allan I. Holloway. 

Commissioner Mial H. Pierce. 

Commissioner Leon G. Weinstock. 

Secretary John F. Tremain. 

Chief Clerk Philip G. Rooaa. 

Prisons, Stats Superintendent of Charles F. Rattigan. 

Deputy Superintendent James L. Long. 

Public Buildings, Superintendent of John J. McGrath. 

Deputy Superintendent Elmer Winner. 

Publio Service Commission First District, 49 Lafayette street, N. Y. City 

Commissioner Lewis Nixon. 

Deputy Commissioner Edward J. Glennon. 

Deputy Commissioner. Alfred M. Barrett. 

Deputy Commissioner Vacant. 

Counsel Terence Farley. 

Secretary James Blaine Walker. 

Chief of Transit Bureau George F. Daggett. 

Secretary of the Bureau of Gas and Electricity. Thomas D. Hoxsey. 

Electrical Engineer R. H. Nexsen. 

Grade Crossing Engineer W. L. Selmer. 

Chief Statistical! A. F. Weber. 

Public Service Commission, Second District 

Commissioner Charles B. Hill, Chairman. 

Commissioner Frank Irvine. 

Commissioner John A. Barhite. 

Commissioner Thomas F. Fennel!. 

Commissioner Joseph A. Kellogg. 

Counsel Ledyard P. Hale. 

Secretary Francis X. Disney. 



xxx State Department JReports 

• 

Public Works, Superintendent or Edward 8. Walsh. 

Deputy Superintendent James E. Doyle. 

Assistant to Deputy and Chief Clerk Alfred M. O'Neill. 

Special Examiner and Appraiser and Claims 
Agent John A. Diz. 

Reporters 

Court of Appeals J. Newton Fiero. 

Deputy Alva S. Neweomb. 

Supreme Court Vacant. 

Deputy Fletcher W. Battershall. 

Miscellaneous William V. R. Erving. 

State Constabulary 

Superintendent George Fletcher Chandler. 

State Fair Commission 

Commissioner Charles A. Wieting. 

Commissioner John H. Cahill. 

Commissioner Henry K. Williams. 

Commissioner Pierre Lorillard, Jr. 

Commissioner Fred B. Parker. 

Commissioner (ex officio) Harry C. Walker, Lieut.-Gov. 

Commissioner (ex officio) Charles S. Wilson, Commissioner 

of Agriculture. 

State Hospital Commission 

Commissioner Charles W. Pilgrim, M. D, 

Chairman. 

Commissioner Andrew D. Morgan. 

Commissioner Frederick A. Higgins. 

Secretary Everett S. Elwood. 

Assistant Secretary Lewis M. Farrington. 

State Probation Commission Edmond J. Butler, President. 

Commissioner AlphonsoT. Clearwater, Vioe-Pres. 

Commissioner Edward C. Blum. 

Commissioner John H. Finley. 

a 

Commissioner Allan I. Holloway. 

Commissioner Henry Marquand. 

Commissioner Mary E. Paddon. 

Secretary Charles L. Chute. 

State Tax Commissioners 

Commissioner Walter H. Knapp, President. 

Commissioner John J. Merrill. 

Commissioner Michael J. Walsh. 

Secretary Horace Q. Tennant. 

Counsel William E. Sill. 

Transit Construction Commissioner John H. Delaney. 

Deputy Commissioner Daniel L. Ryan. 

Counsel Louis C. White. 

Chief Engineer Daniel L. Turner. 

Chief of Accounts Frederick W. Lindars. 



State Officials ttti 

UmvxBBiTT or the Stats or New Yobs 
Regents, Board or 

Chancellor Pliny T. Sexton, LL.B., LL.D., 

Palmyra. 
Yioe-GnanoeUor Albert Vander Veer, M.D., MA., 

Ph.D., LL.D., Albany. 
Regent Chester S. Lord, MA, LL.D., 

Brooklyn* 
Regent William Nottingham, M.A., 

Ph.D., LL.D., Syracuse. 
Regent Francis M. Carpenter, Mount 

Eisco. 
Regent Abram I. Elkus, LL.B„ LL.D., 

D.C.L., New York. 

Regent Adelbert Moot, LL.D., Buffalo. 

Regent C. B. Alexander, M.A., LL.B., 

LL.D., Lit.D., New York. 
Regent Walter Guest Kellogg, BA, 

LL.D., Ogdensburg. 
Regent James Byrne, B.A., LL.B., 

LL.D., New York. 
Regent Herbert L. Bridgman, MJL, 

Brooklyn. 
Regent Thomas J. Mangan, MA., 

Binghamton. 

CoMMissioNEB or EDUCATION John H. Haley, M.A., LL.D., 

L.H.D. 

Deputy Commissioner and Counsel Frank B. Gilbert, B.A. 

Assistant Commissioner and Director of Pro- 
fessional Education Augustus S. Downing, M.A., 

Pd.D., L.H.D., LL.D. 

Assistant Commissioner for Secondary Edu- 
cation Charles F. Wheelock, B.S., LL.D. 

Assistant Commissioner for Elementary Edu- 
cation George M. Wiley, M.A. 

Director of State Library James I. Wyer, Jr., M.L.S. 

Director of Science and State Museum John M. Clarke, D.Sc, LL.D 

Chiefs and Directors of Divisions: 

Administration Division Hiram C. Case. 

Agricultural and Industrial Education Division. Lewis A. Wilson. 

Attendance Division James D. Sullivan. 

Educational Extension Division William R. Watson, B.S. 

Examinations and Inspections Division George M. Wiley, M. A. 

Archives and History Division James Sullivan, M.A., Ph.D. 

School Buildings and Grounds Division Frank H. Wood, M.A. 

Library School Division Frank E. Walter, M.A., M.L.S. 

School Libraries Division Sherman Williams, Pd.D. 

Visual Instruction Division Alfred W Abrams, Ph.B. 



PUBLIC SERVICE COMMISSION 



FIRST DISTRICT 



In the Matter of the Hearing on the Motion of the Commission as 
to the Lawfulness and Reasonableness of a Provision of the 
Schedule for Electric Service of the Richmond Light and 
Railboad Company Relative to the Charge for Installing and 
Removing an Electric Meter on Premises to be Occupied for 
Less than One Year 

Case No. 2371 

(Public Service Commission, First District, June 4, 1919) 

Electric lighting — temporary service — charge for installation of meters dis- 
allowed. 

The schedule of an electric light company provides for a charge of five 
dollars for installing meters on premises to be occupied for less than one 
year in addition to the regular charge for current used. The installation 
is not based upon the amount of current consumed. Held, that the 
charge for installing meters is unreasonable and that the provision of 
the schedule relating to this charge should be canceled. The views of 
the Commission expressed as to the proper method of charging for 
installation of meters. 

Nixon, Commissioner. — The Richmond Light and Railroad 
Company, which, besides operating street railway lines, carries 
on an electric lighting business on Staten Island, put into effect 
on March 27, 1919, the following provision of its schedule for 
electric service, set forth on Revised Sheet No. 16 : 

" Rider No. 2- A — Temporary Service — For premises that are 

to be occupied less than one year, a charge of five ($5.00) dollars 

will be made, to cover cost of setting and removing meter. If 

service is used continuously for twelve (12) months the $5.00 will 

be refunded. The charge for current to be made by meter at 

Retail lighting rate." 

After full consideration of the reasons advanced by the company 
State Deft. Kept. — Vol. 20 1 



State Department Reports 



[Vol. 20] Public Service Commission, First District 

at the hearing regarding that provision, I have concluded that the 
provision as it now stands is unreasonable and should be cancelled. 

The object of the rider was to reach the occupants of summer 
bungalows, a large number of which are located at or near the 
beaches extending from South Beach to Tottenville. The com- 
pany supplies electricity to most of these bungalows, some of which 
are rented for only a few weeks at a time. The amount of current 
used in each bungalow is small and the period of consumption 
averages about six or seven weeks. The company claims that this 
bungalow business is unprofitable, due in a great measure to the 
cost of installing and removing its meters at least once each season 
and more frequently in some cases where different tenants occupy 
the same bungalow for short periods. 

The rider under consideration, however, is of much wider scope. 
All applicants for electricity, irrespective of the length of time 
they may have been customers of the company at some other 
address or the length of time they propose to take current at the 
new address, come within its terms. The provision is not based 
upon the amount of consumption for it is obvious that one taking 
current for less than a year mav consume considerably more than 
another using it for a much longer period and yet the former 
would forfeit his five dollars deposit and the latter would not. 

I recognize that there is justification for requiring temporary 
consumers, like summer bungalow occupants, to pay something 
additional for an accommodation which necessitates extra expense 
to the company such as the cost of installing and removing meters', 
and which, owing to the small amount of current consumed, brings 
practically no return. But in order to reach this class of con- 
sumers it is not necessary to place unreasonable burdens upon 
other classes. All classes must be treated fairly in relation to each 
other. While I do not desire to prescribe to the company just 
how the problem shall be worked out, a rider might be acceptable 
to the Commission if it imposed upon every consumer a charge for 
installing a new meter, with the provision that after a certain 
reasonable quantity of current has been consumed, the money shall 
be refunded, and further if the meter is removed before the con- 



Mattes of Brooklyn Heights Railroad Co. 3 

Public Service Commission, First District [Vol. 20] 

sumption of such quantity there shall be a refund equal to the pro- 
portion of the amount consumed to the amount stated in the rider. 
Such a provision would relieve in a reasonable time the long-time 
consumer altogether of the special charge, but would prevent loss 
to the company on the part of consumers who use only small quan- 
tities of electricity for a short time. Moreover, if a consumer 
although having a meter in service only a short time nevertheless 
uses a stipulated quantity, he will have the full charge refunded. 
And it would be fair that any consumer, when discontinuing the 
use of current,will have refunded the proportion of current used 
to the amount stated in the rider. The refund should be based 
upon reasonable average conditions and should not be arbitrarily 
limited as to time, regardless of the use made by the consumer or 
the return realized by the company. 

The Richmond Light and Railroad Company should at once 
withdraw and cancel its present rider No. 2-A and, if it is so 
advised, may file a revised sheet providing for a meter installation 
and removal charge along the lines above suggested. 



In the Matter of the Hearing on the Motion of the Commission 
Concerning the Regulations, Practices and Service of Thb 
Brooklyn Heights Railroad Company, Brooklyn, Queens 
County and Suburban Railroad Company, Coney Island 
and Gravesend Railway Company, The Coney Island and 
Brooklyn Railroad Company and The Nassau Electric 
Railroad Company on Their Respective Lines of Street Suiv 
face Railroad 

Standards and Schedules of Service 
Case No. 1880 

(Public Service Commission, First District, June 5, 1919) 

The companies having established and filed certain schedules pursuant 
to an order and amendments thereto heretofore made and thereafter 
hearings having been had in respect of the service provided by said com- 



State Department Reports 



[Vol.20] Public Service Commission, First District 

i — — - — — — — _ 

panies and in respect of the operation and effect of said order as amended 
and modified it is now ordered that the companies file certain schedules 
of service within thirty days of the date of this order showing route, 
run numbers, terminals, car depots, termini of each run of cars, running 
time, display on cars "midnight schedule," etc. 

Nixon, Commissioner. — An order having been duly made in 
this proceeding on March 4, 1918, and amended and modified by 
orders dated respectively May 7, 1918, and April 14, 1919, desig- 
nated Order "A," directing and requiring the Brooklyn Heights 
Railroad Company, Brooklyn. Queens County and Suburban 
Railroad Company, Coney Island and Gravesend Railway Com- 
pany, the Coney Island and Brooklyn Railroad Company and the 
Nassau Electric Railroad Company to establish, file, observe and 
maintain definite schedules representing standards of adequate 
service on the various lines operated by said companies respec- 
tively; and the said companies having established and filed certain 
schedules pursuant to the provisions of said order as amended 
and modified ; and various hearings having been had by and before 
the Commission since the making of said order, in respect of the 
service provided by said companies and in respect of the opera- 
tion and effect of said order as amended and modified; and the 
Commission being of the opinion after said hearings that said 
companies should be directed to comply with each and all of the 
following requirements. 

Now, therefore, it is hereby 

Ordered, That the Brooklyn Heights Railroad Company, Brook- 
lyn, Queens County and Suburban Railroad Company, Coney 
Island and Gravesend Railway Company, the Coney Island and 
Brooklyn Railroad Company, and the Nassau Electric Railroad 
Company, be and they hereby are, and each of them is, directed 
to do each and all of the following things, to wit : 

I. Prepare and file with this Commission within thirty days 
after the date of this order, at least three days before their 
effective date schedules showing as to each line operated or con- 
trolled by each such company and for each day of the week 
(excluding Saturdays after 12 o'clock noon, Sundays and legal 
holidays) the service which such company has established and 



Matter of Brooklyn Heights Railroad Co. 5 

Public Service Commission, First District [Vol. 20] 

is providing and is willing to provide and will continue to pro- 
vide until changed in the manner prescribed by law and this 
order, and the number and headway of cars which such company 
is operating and is willing to and will continue to operate until 
such number or headway is changed in the manner prescribed by 
law and this order, a r \ representing and constituting standards of 
adequate service for the transportation of passengers on such line 
until such time or times as such schedules shall be changed in 
the manner hereinafter provided, each of which such schedules 
shall be signed and countersigned by the proper officers or agents 
of the company for which such schedule is submitted, and shall 
show, as to and for each line: 

(a) The route over which the operation of such line is to take 
place ; 

(b) The run numbers assigned to such line; 

(c) The terminals and car depots for such line; 

(d) The termini of each run of cars on any part of such line; 

(e) The location of specific points not less than five in number 
on each line on which the running-time over the length thereof 
exceeds twenty minutes, and two points on any other line, past 
which the car of each run shall be scheduled to be operated at 
designated times of the day and night; ruch points, the runs, and 
the scheduled time at which each car on such run shall pass each 
such designated point, to be shown in and by the said schedule; 

(f ) Specific times of the day and night when the cars of each 
run shall be scheduled, respectively, to depart from such termini 
and to pass the designated points. 

Provided, however, That at any time after the filing of any 
such schedule or schedules, any of the said companies may make 
changes in any such schedule by filing with the Commission a sup- 
plemental or modified schedule or statement setting forth fully 
the changes to be made in the schedule last theretofore filed in 
accordance with paragraph IV hereof and not inconsistent with 
any order of this Commission; and provided further that any 
schedules now on file with the Commission which comply with 
and conform to the requirements of this order may, upon suitable 



6 State Department Reports 

[Vol. 20] Public Service Commission, First District 

■ 

notice to the Commission to that effect, be deemed as filed in 
compliance herewith and shall be observed accordingly. 

II. Operate cars and maintain service on each such line accord- 
ing to and in compliance with the times of departure from the 
termini of such line according to the schedules therefor and sup- 
plements thereto or modifications thereof at the time on file with 
the Commission and all orders of this Commission affecting such 
service, and continue to operate cars and maintain service from 
such termini according to and in compliance with such schedules 
and supplements or modifications, and orders, until such schedules 
and supplements or modifications or orders, or the requirements 
thereof, have been modified or changed by order of the Commis- 
sion after hearing, or through the filing of a new schedule or 
schedules in accordance with paragraph IV hereof. 

III. Display in a conspicuous place within and upon the side 
of each car operated pursuant to a schedule filed with the Com- 
mission as set forth in paragraph I of this order, a suitable time- 
table (to be termed "midnight schedule") substantially in the 
form annexed to and made a part of this order marked 
Exhibit "A" showing the headway and service which the said 
company is required to maintain and operate upon such line 
during the period from 12 midnight to 5 a. m. or any part thereof 
during which the scheduled interval is fifteen minutes or more, 
such timetables to show the minimum service which may be 
operated. Such timetables to be posted and displayed in such cars 
on or before the respective dates specified in Exhibit " B " hereto 
annexed and made a part hereof. 

IV. At any time after the filing of the original schedules, 
any company may file with this Commission amended or substi- 
tuted schedules or supplements thereto, showing changes which 
the company desires to make with respect to any of the matters 
in the filed schedules specified in paragraph I hereof, and which 
are not inconsistent with anv order of the Commission, and unless 
otherwise ordered by the Commission after hearing, such amended 
or substituted schedules shall go into and be and continue in effect 
until further changed as provided in this paragraph or by order 
of the Commission after hearing. Provided, however, that noth- 



J 



Matteb of Bkookltn Heights Railroad Co. 7 

Public Service Commission, First District [Vol. 20] 

ing contained in this order or done by any company in pursuance 
thereof shall be or be construed to be in derogation of or in substi- 
tution for the duty of such company to provide reasonable and 
adequate service and operate a sufficient number of cars therefor 
at all times on each of its lines, by running cars or affording 
service, as needed, in excess of the requirements of such schedules 
and supplements at the time in force as to such line, or otherwise; 
and nothing contained in this order or done by any company in 
pursuance thereof shall be construed to prevent any of the said 
companies from operating at any time on any line any cars or 
service in addition to those set forth in the schedules and sup- 
plements at the time in force as to such line. 

Further ordered, That the making and entry of this order, and 
anything done hereunder, shall be without prejudice to any other 
or further order in this case or in respect to the subject-matter 
hereof or of the said schedules, and shall be subject to any further 
hearing for the purpose of requiring changes in the said schedules 
of service and operation, or any of them; and it is 

Further ordered, That this order shall take effect immediately 
and shall continue in force until changed or abrogated by further 
order of the Commission and that within five days after the 
service of this order said companies and each of them shall notify 
the Commission in writing whether the terms of this order are 
accepted and will be obeyed. 

Further ordered, That this order shall supersede and take the 
place of the order adopted by the Commission herein on March 4, 
1918, as amended and modified by orders dated respectively 
May 7, 1918, and April 14, 1919. 



8 



State Department Reports 



[Vol. 20] 



Public Service Commission, First District 



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Kossomagno v. Bbonx Gas & Electeio Co. 9 

Public Service Commission, First District [Vol. 20] 

Exhibit " B r 

•Schedule showing the respective dates on or before which the 
companies operating the respective lines shall prepare and display 
in scheduled cars, midnight time-tables as provided in paragraph 
III of this order. 

Lines Now Operated Post Midnight 

from Depot Schedules 

1919 
1919 
1919 
1919 
1919 
1919 
1919 
1919 



Flntbush depot July 1 

Ilalsey street and Canarsie July 8 

Franklin avenue and Bergen street July 15 

DeKalb avenue and Fresh Pond depot July 22 

Maspeth and Crosstown depot July 29 

East New York depot August 5 

Ninth avenue depot August 12 

Fifty-eighth street depot August 19 



In the Matter of the Complaint of Frank Rossomaqno against 
The Bronx Gas and Electric Company as to Alleged Refusal 
to Furnish Electric Service to the Premises No. 1653 Barnes 
Avenue in the Borough of The Bronx, New York City 

Case No. 2368 

(Public Service Commission, First District, June 10, 1019) 

Electric service — extension of wires for domestic use — method of adjusting 
cost of extension. 

Complainant's house wired and equipped for electric service is situated 
about 700 feet from the company's nearest domestic lighting wires. The 
company refuses service unless complainant makes a deposit of $136.90, 
no part of which is to be refunded on the basis of his bills for current. 
Held, that the extension desired by complainant is reasonable and an 
order will be entered directing the company to extend its wires and to 
supply electricity to complainant's premises upon the deposit of 50 per 
cent of the reasonable cost of the extension and that the amount 



10* State Department Reports 

[Vol. 20] Public Service Commission, First District 

deposited be refunded on the basis of one-half of the monthly bills for 
current furnished complainant and of the bills of additional consumers 
who may be served by the extension. 

Nixon, Commissioner. — The Bronx Gas and Electric Company 
has refused to furnish electric service to the complainant's resi- 
dence situated at 1653 Barnes avenue in the borough of The Bronx, 
unless complainant would deposit in advance the sum of $136.90 
no part of which would be refunded to him monthly or otherwise 
on the basis of his current bills. The residence of complainant, 
which is a two-family house, wired and equipped for electric serv- 
ice, is located about 700 feet distant from the company's nearest 
wires suitable for domestic lighting. The company claims that 
to properly connect these premises it will have to construct 
approximately 1,600 feet of wire with the necessary attachments 
at a cost of about $141. At the present time the company's 
poles and high tension wires used in connection with the public 
lighting of Barnes avenue pass in front of complainant's home, 
but those wires are not adapted for domestic purposes. 

The company's position as to extensions of this character is 
stated as follows: "As the operations of the Company for the 
past two years have not permitted it to make a fair return on its 
investment and has resulted in a decided loss, it has not been in 
a position to accept any business involving extensions to the 
plant, beyond the one hundred feet required by law, unless said 
extensions were paid for in full by the applicant. * * * " 

This company, as its name indicates, carries both a gas and an 
electric business but its electrical- operations must be' considered 
apart from the gas operations. Municipal Gas Company v. Pub- 
lic Service Commission, 225 X. Y. 89, 99-101. An examina- 
tion of its annual report for the year ending December 31, 1918, 
which was received in evidence, clearly shows that its electrical 
business cannot be considered unprofitable. 

It must be remembered also that this company is the only 
one serving or claiming a franchise to serve with electricity the 
eastern section of the borough of The Bronx and its failure to 



.Uossomagno v. Bbonx Gas & Eleotbic Co. 11 



Public Service Commission, First District [Vol. 20] 

make reasonable extensions in that territory deprives the resi- 
dents thereof of a service which it alone can give. 

The company's wires, if constructed to serve complainant's 
premises, would be adequate to serve other consumers on the line 
and, according to the complainant, his neighbor on each side and 
others not far distant have signified their willingness to take 
electricity if the extension is constructed. 

It appeared at the hearing that the general practice of electrical 
corporations within the jurisdiction of the Public Service Com- 
mission for the First District as to extensions beyond 100 feet 
of existing wires, is to require the applicant to deposit in advance 
50 per cent of the cost of construction and to thereafter refund 
to him one-half of his current monthly bills until the entire 
amount of deposit is repaid. I also understand that if any addi- 
tional consumers are served by the extension those companies 
allow a further rebate to the original applicant of 50 per cent 
of the monthly bills of such additional consumers. 

Such a practice seems to me to be a proper one for the com- 
pany to follow in this case. The extension desired, in my 
opinion, is reasonable, and I accordingly direct the entry of an 
order requiring the Bronx Gas and Electric Company to extend 
its wires so as to supply with electricity the premises of the 
complainant upon the deposit by him of 50 per cent of the 
reasonable cost of the extension to be refunded on the basis 
of one-half of his current monthly bills and of the bills of any 
additional consumers that may be later served from the extension. 

As the facts in the case of Mr. Frank A. Smith of 2447 
St. Raymond's Avenue, who with the consent of the company's 
president, stated his complaint at the hearing in this proceeding, 
in my opinion justify an extension of the company's services 
to his premises, I recommend the construction of such an exten- 
sion upon terms similar to those mentioned in the preceding 
paragraph of this memorandum. 



12 State Department Reports 



[Vol.20] Public Service Commission, First District 



In the Matter of the Application of Job E. Hedges, as Receiver 
of the New York Railways Company, with Respect to the 
Sufficiency of the Maximum Rates and Fares Chargeable upon 
the System of Said Company, and for an Order Authorizing a 
Charge of Three Cents for Transfers Thereon and Determining 
that the Resulting Charges are Just and Reasonable 

* 

Case No. 2389 

(Public Service Commission, First District, July 15, 1019) 

Street railways — charge of two cents for transfers reasonable. 

It appearing that the present rate of fare is unreasonable and unjust 
to the company, being insufficient to yield a reasonable compensation for 
the services rendered, and there being grave danger of the complete dis- 
integration of the company's transportation system by the foreclosure of 
the mortgages covering the properties, it is ordered that the company 
and its receiver from the date of this order to and including July 7, 1920, 
are authorized to charge two cents for each transfer issued except for 
transfers required to be given under a municipal franchise, agreement 
or consent. 

By the Commission. — Job E. Hedges, as receiver of the New 
York Railways Company, having, by his petition, dated June 26, 
1919, and verified June 27, 1919, made application to the Com- 
mission to be relieved of the statutory requirement and orders of 
the Commission in the matter of issuance and acceptance of trans- 
fers, and for an order providing that upon the suspension of the 
requirements for the issuance of transfers, other than those 
imposed by municipal agreements or franchises, petitioner shall 
be authorized and directed by the Commission to issue to each 
passenger, upon the payment of three cents in addition to the 
regular rate of fare, such transfers as the convenience of the public 
may require, and for an order permitting, without the requirement 
of the thirty days' notice and publication, provided by section 29 
of the Public Service Commissions Law, the filing of an amended 
tariff schedule in accordance with the determination made by the 
Commission on this application; and the Commission having held 
hearings on said application on June 30, 1919, July 2, 1919, and 
July 7, 1919, Godfrey Goldmark, counsel, Terence Farley, counsel, 



Application of Hedges 13 

Public Service Commission, First District [Vol.20] 

m 

and George H. Stover, assistant counsel, attending for the Com- 
mission, and William P. Burr, corporation counsel, and Edgar J. 
Kohler, assistant corporation counsel, appearing on behalf of the 
city of New York, and Henry L. Stimson appearing for Job E. 
Hedges, as receiver of the New York Railways Company; and 
testimony and evidence having been received as to the value of 
the property of said New York Railways Company actually used 
in the public service, and as to the earnings and expenditures of 
fares and charges for the transportation of persons and the regula- 
said company, and as to other matters affecting its net revenue and 
earning capacity and its rate of return ; and it appearing that the 
rates, fares and charges chargeable by said New York Railways 
Company or its receiver are insufficient to yield reasonable com- 
pensation for the service rendered, and that the present rates, 
tions and practices affecting such rates are unjust and unreason- 
able to the company and to its receiver ; and it further appearing 
that a charge of two cents for each transfer, in addition to the 
regular fare, will not be unjust or unreasonable to the public and 
will not yield the said company or its receiver an unreasonable 
compensation for the service rendered or an unreasonable return 
upon the value of the property actually used in the public service ; 
and it further appearing that, unless the revenues of the petitioner, 
as receiver of the New York Railways Company, are increased, 
there is grave danger of complete disintegration of the New York 
Railways Company system by foreclosure of the various mortgages, 
the bonds of which are outstanding in the hands of the public, and 
of entry by the various lessors upon their leased properties, which 
disintegration would result in great inconvenience to the public, 
abolition of transfer privileges altogether in many instances, and 
increase of cost of transportation to the public owing to the great 
attendant loss of economy in operation ; and it further appearing 
that the additional revenue, resulting from such charge of two 
cents for transfers, will be of material value in relieving the situa- 
tion by which the disintegration of the entire system operated by 
the petitioner as receiver of the New York Railways Company is 
threatened, it is hereby 

Ordered, That from the date of this order and to and including 



14 State Department Repobts 

[Vol. 20] Public Service Commission, First District 

the 7th day of July, 1920, unless hereafter extended by order of 
the Commission, the receiver of the New York Railways Company 
and the said New York Railways Company be and they hereby 
are, and each of them is authorized to charge, in addition to the 
regular fare, two cents for each transfer demanded by a passenger 
desiring to make one continuous trip or to take one continuous 
ride between any two points on the lines owned, operated or con- 
trolled by the said New York Railways Company or its receiver, 
according to the local and joint passenger tariff No. 1 of said com- 
pany issued and filed under the order of the Public Service Com- 
mission for the First District and effective June 1, 1918, except 
in the case of transfers required by the terms of a municipal 
franchise, agreement or consent, it being the purpose and intent 
of this order to authorize the receiver and the company to charge 
for transfers at and only at such points as the Commission is em- 
powered by law to authorize them to charge for transfers. 

Further ordered, That the said company and its receiver shall 
keep separate, true and accurate accounts and records showing any 
and all additional receipts, revenue and expenses derived from or 
arising out of the issuance of transfers or other tokens upon 
demand and upon payment of the cash rate, fare or charge of 
two cents, as hereinbefore provided, instead of the cash rate, fare 
or charge of five cents, as heretofore obtaining, and on or before the 
fifteenth day of each month shall make and file with the Commis- 
sion verified reports of such additional receipts, revenue and 
expenses during the previous month. 

Further ordered, That permission be and the same hereby is 
granted to Job E. Hedges, as receiver of the New York Railways 
Company, to issue, file and put into effect, on August 1, 1919, 
revised sheets to the local and joint passenger tariff No. 1, of the 
New York Railways Company, showing the changes made in its 
rate by reason of the adoption of the charge for transfers author- 
ized by this order; provided that for at least ten days before the 
said schedule shall go into effect the said receiver shall post in each 
and every car operated by him a notice to the public announcing 
the date on which said charge for transfers shall go into effect and 



Application of Van Brunt St. & Erie Basin R. R Co. 15 

Public Service Commission, First District [VoL 20] 

indicating the transfers and transfer points affected ; and farther 
provided that such new or revised tariff schedule and its operation 
shall not authorize or be deemed to authorize the said company 
or its receiver to charge or collect a rate, fare or charge, or to eoc- 
act an additional charge for transfers, in excess of, or in addition 
to, the rate, fare or charge authorized by this order. 

Further ordered, That this order shall take effect immediately 
and shall continue in force until changed or abrogated by further 
order of the Commission, and that the making and entry of this 
order shall be without prejudice to the right of the Commission to 
reopen this proceeding at any time and to make any other or 
further order or orders supplementing, modifying, changing or 
revoking this order, and without prejudice to the right of the Com- 
mission to hold other hearings and without prejudice to the right 
of the city of New York, if dissatisfied with the valuation of the 
property of the New York Railways Company, introduced in evi- 
dence in this case, to apply at the end of six months to have this 
proceeding reopened. 

Further ordered, That on or before the 21st day of July, 1919, 
said Job E. Hedges, as receiver of the New York Railways Com- 
pany, shall notify the Commission in writing whether the terms 
and conditions of this order are accepted and will be obeyed. 



In the Matter of the Hearing on the Application of the Van 
Bbunt Street and Ekie Basin Railboad Company for an 
Order Granting Permission to Put Into Effect after Five Days' 
Notice and Publication a Tariff Schedule Increasing the Local 
Cash Fare of the Company from Three Cents to Four Cents 

Case No. 2374 

(Public Service Commission, First District, August 8, 1019) 

Street railways — when increase of fare cannot be based upon a prospective 
increase in wages — failure to sustain burden of proof under section 29 of 
the Public Service Commissions Law. 

A franchise Was granted for part of the present line by the common 
council of the city of Brooklyn on October 13, 1862, limiting the fare to 
three cents. The company was authorized to extend its line and to 



16 State Department Repobts 

[Vol. 20] Public Service Commission, First District 

charge a four cent fare by chapter 533 of the Laws of 1867, which four 
cent rate was continued by chapter 502 of the Laws of 1873, provided 
tickets were sold at the company's office in packages of eight for twenty- 
five cents, sixteen for fifty cents and thirty- two for one dollar. The route 
is about one mile and one-sixth in length with double track and overhead 
trolley. The company buys its power and has a capital stock of $200,000 
and funded debt of $31,000. The passenger revenue increased from 
$40,858.98 for the fiscal year 1914 to $70,769.37 for the fiscal year ending 
June 30, 1919, during which period of five years it has paid four and five 
per cent dividends on its capital and increased its surplus from 
$43,013.53 to $66,965.46. The application is based upon a prospective 
increase in wages. Held, that the application does not come within the 
provisions of section 49, subdivision 1, of the Public Service Commissions 
tLaw but is an application under section 29 of the said law for leave to 
file schedules showing the four cent rate authorized by the Legislature; 
that the company has not sustained the burden of proof to show that 
the proposed increase in rate is just and reasonable. Held, further, that 
the Commission cannot as a rule allow an increase in fare based upon a 
prospective increase in wages, especially where the increase is made con- 
tingent upon an increase in fare. Application denied. 

Baeeett, Deputy Commissioner. — This hearing was on appli- 
cation of the Van Brunt Street and Erie Basin Railroad Company 
for permission to put into effect, after five days' notice and publi- 
cation, a tariff schedule increasing the local cash fare of the com- 
pany from three cents to four cents. 

At the hearing on July 10, 1919, a motion was made, on behalf 
of the city of New York, to dismiss the application on the ground 
thart the Commission was without jurisdiction to increase a .rate of 
fare above that fixed in the local franchise. This raises the first 
question presented in this case. 

A franchise for part of the present route, namely, upon Van 
Brunt street, was granted by the common council of the city of 
Brooklyn on October 13, 1862, and provided " that said company 
shall transport passengers over said road at a fare not exceeding 
three cents." Later, however, the Legislature, by chapter 533 of 
the Laws of 1867, authorized the company to extend its line 
through Elizabeth (now Beard) street to Columbia street, and 
provided (§3) that "After the extension provided for in the first 
section of this act shall have been completed, said company shall 
have the right to charge a rate of fare not exceeding four cents for 



Appucation of Van Brunt St. & Erie Basin R. R. Co. 17 

Public Service Commission, First District [Vol. 20] 

each passenger transported on their road/' Still later, the Legis- 
lature, by chapter 502 of the Laws of 1873, amended section 3 
so as to read: " Tho said company shall have the right to charge 
a rate of fare not exceeding four cents for each passenger trans- 
ported on their road, provided that said company shall sell tickets 
at its office, in the city of Brooklyn, in packages of eight t«ir 
twenty-five cents, sixteen for fifty cents, or thirty-two for one 
dollar." 

From this, it clearly appears that the Legislature purported to 
increase the maximum rate from three cents to four. The city, 
however, contends that it had no power to do so, a contention which 
does not seem to he supported by intimations recently made by 
the Court of Appeals. The only point decided in the much- 
quoted Matter of Quinby v. Public Service Commission, 223 N. 
Y. 244, was that the Legislature had not delegated to the Commis- 
sion the power to increase a rate fixed in a franchise granted under 
section 18, article III, of the State Constitution. The question 
of power of the Legislature to alter the rate fixed in the franchise 
was not involved. In that case " the question as to the power of 
the legislature to deal with such rates was specifically reserved 
and not decided. The opinion clearly intimated that such power 
did exist" This was said by Judge Crane in People ex rel. 
Village of S. Glens Falls v. Public Service Commission, 225 N". 
Y. 216, 225 ; and in Matter of International Railway Company v. 
Public Service Commission, 226 N. Y. 474, Judge Cardozo said 
that the decision in the Quinby case "was explained and limited 
in " the Glens Falls case. As explained and limited, it would 
appear that the Quinby case was decided only with reference to 
franchises granted since 1785, and that, even as to these, the 
power of the Legislature to regulate the rates fixed in them 
probably exists. 

The difficulty which confronted the court in the Quinby case 
arose from the fact that " our Constitution, by requiring the con- 
sent of the local authorities, recognizes that our municipalities are 
pro tanto independent of legislative control, exercising some frag- 
ment of power otherwise legislative in character, which has been 
State Dept. Rett.— Vol. 20 2 



18 State Department Reports 

[Vol. 20] Public Service Commission, First District 

thus irrevocably transferred by the fundamental law from the 
legislature to the locality." This legislative power had not bean 
delegated by the Constitution to the locality in 1862, when the 
franchise was granted, in 1867, when the Legislature purported to 
change the rate, or in 1873, when the Legislature again attempted 
to regulate the rate. 

That a franchise granted by a municipality and accepted by a 
company constitutes a contract within the meaning of section 10, 
article I of the Federal Constitution, and that it cannot be taken 
away or modified by the municipality is not open to doubt ; but the 
question remains whether such contracts are not made subject to 
the sovereign power of the Legislature to regulate the rates charged 
by public utilities. " There are times," Judge Cardozo said in the 
recent International Railway case, " when the police power modi- 
fies a contract in spite of the intention of those who have con- 
tracted." 

Entirely apart from this consideration, it should be borne in 
mind that the municipality was the creature and agent of the 
State. It was within the power of the State to direct the munici- 
pality to modify the contract, or to do directly as principal what 
it could order its agent to do. By fixing the maximum rate at four 
cents, it acted within its powers. At that time there was no 
delegation of sovereign powers to the municipality ; and it is un- 
necessary to inquire as to the extent of the limitations which may 
be imposed on the legislative powers by section 18, article III, of 
the Constitution. 

The city also contends that assuming that the Legislature could 
alter the franchise rate, it did not intend to do so. The language 
of the two acts referred to seems to dispose of that. The act of 
1867 and the act of 1873 each provides that " the said company 
shall have the right to charge a rate of fare not exceeding four 
cents for each passenger transported on their road/' It seems 
clear that " their road " means their entire road ; and that the Leg- 
islature did not intend, on a road, a little over one mile in length, 
to provide for the complicated system of fares which would result, 
if three cents were charged for a ride between points exclusively 



Application of Van Brunt St. & Erie Basin R. R. Co. 19 

Public Service Commission, First District [Vol. 20] 

on Van Brunt street, and four cents for a ride exclusively on 
Elizabeth street or from a point on Van Brunt street to a point 
on Elizabeth street or vice versa. It seems to have been the inten- 
tion of the Legislature that there should be but one fare on the 
entire road and that the fare should not be higher than four cents. 

The four cent maximum established by the act of 1867 was not 
taken away by the act of 1873. The latter act merely added the 
words " provided that said company shall sell tickets at its office, 
in the city of Brooklyn, in packages of eight for twenty-fivd cents, 
sixteen for fifty cents, or thirty- two for one dollar." It did not 
alter the rate for those who paid cash fare, but merely provided 
that passengers who wished to do so might obtain lower rates by 
purchasing tickets in bulk and in advance at the office of the 
company. For those who did not avail themselves of this privilege, 
the rate would remain four cents. 

The conclusion which I have reached upon this question is that 
the Legislature had power to increase the maximum rate from 
three cents to four, and that it did so subject to the provision con- 
cerning the purchase of tickets in advance. 

This is not an application, under subdivision 1 of section 49 
of the Public Service Commissions Law for an increase of rates by 
the Commission; it is an application under section 29 for leave to 
file schedules showing the four cent rate already authorized by the 
Legislature. It does not involve the question whether the Legis- 
lature has delegated to the Commission the power to increase 
rates. Section 29 was enacted long after the act of 1867 or the 
act of 1873 was adopted. After these acts were passed, the com- 
pany might have increased its rate to four cents ; but it did not do 
so. It had the right to charge four cents ; but never took steps 
to make that rate effective. After the enactment of section 29 and 
the filing of its original schedule, the company could not change 
its filed schedules so as to charge the full amount authorized by 
the Legislature, except after thirty days' notice and publication, 
unless it secured from the Commission permission to file new 
schedules on less than thirty days' notice. The company is now 
seeking such permission; and the action of the Commission in 



20 State Department Reports 



[Vol. 20] Public Service Commission, First District 

respect to the application is to be determined with reference to 
section 29. The portions of section 29 which have particular 
reference to this application are as follows: 

" The commission, for good cause shovm, may allow changes 
in rates without requiring the thirty days' notice and publication 
herein provided for, by duly filing and publishing in such manner 
as it may direct an order specifying the change so made and the 
time when it shall take effect ; all such changes shall be immedi- 
ately indicated upon its schedules by the common carrier. * * * 

"At any hearing involving a rate increased after the first day 
of January, nineteen hundred and fourteen, or of a rate sought 
to be increased after this section as amended takes effect, the 
burden of proof to show that the increase in rate or proposed 
increase in rate is just and reasonable shall be upon the common 
carrier ; and the commission may give to the hearing and decision 
of such questions preference over all other questions pending 
before it and decide the same as speedily as possible." 

Whether good cause has been shown for granting this applica- 
tion and whether the company has sustained the burden of proof to 
show that the proposed increase in rate is just and reasonable, 
requires a consideration of the facts adduced at the hearings. 

The company operates over a route about a mile and one-sixth 
in length, with overhead trolley and is double-tracked. It has 
two and thirty-two one-hundredths miles of track, sixteen cars 
from ten to twenty years old, a car barn and other real estate. 
It has no power plant, but buys its power from the Brooklyn 
Heights Railroad Company on a car mileage basis. It has out- 
standing capital stock of $200,000 and funded debt to the amount 
of $81,000. 

The company shows that its expenses have increased; but it 
appears that its passenger revenue has increased also. Its pas- 
senger revenue increased from $40,858.98 for the fiscal year 
ending June 30, 1914, to $70,769.37 for the fiscal year ending 
June 30, 1919. Its net corporate income for 1914 was $8,284.41 
and for 1919, $12,012. During that period it has paid 4 and 
5 per cent dividends on $200,000 of capital stock. Its surplus 



Application of Van Brtjnt St. & Erie Basin R. R. Co. 21 

Public Service Commission, First District [Vol. 20] 

at the close of 1914 was $43,013.53 and at the close of 1919, 
$66,965.46. 

The road seems to have demonstrated its earning capacity. It 
is true that no dividends were paid from the time it went into 
operation to 1890; but it appears that this was due to the fact 
that the earnings were turned back into the road. The record 
does not show what these earnings were; but it is probable that 
$75,000 of the stock was issued for appreciation of the road. In 
1891 and 1892, 6 per cent dividends were paid on a capital stock 
of $150,000; and in 1893, 5% per cent was paid. In 1893 the 
capital stock was increased to $200,000. In 1894 and 1895, 
3 per cent was paid; in 1896, 1 per cent; in 1897, 1898 and 1899 
no dividends; in 1900, 2 per cent; in 1901, 4 per cent; from 
1902 to 1911, 5 per cent; from 1912 to 1915, 4 per cent; and 
from 1916 to 1919. 5 per cent. In addition to this, the company, 
in 1903 and 1905, purchased back $34,000 of its own bonds at 
110, and its surplus account at the end of 1919 showed $20,000 
in Liberty bonds, and $11,819.98 in cash and accounts receivable. 

Of course, the reasonable average return to which a company 
is entitled is not a return upon its capital stock, but upon the value 
of the property actually used in the public service. There is no 
appraisal from which the value of the property may be deter- 
mined. The investment in the property according to the com- 
pany's books on June 30, 1919, was $266,255.44. It is certain, 
however, that the books do not show the true value of th^ prop- 
erty. Nor is there any reason for supposing that the capitaliza- 
tion of $231,000 is the same as the true value. The assessment 
for the franchise tax which includes the value of the franchise 
as well as of the property in the streets was $87,420 for the last 
year. The assessed value of other real property which includes 
a parcel not used for railroad purposes was $18,700. The book 
value of the cars is $31,367.85, but as these cars are from ten to 
twenty years old, large deductions from the book value must be 
made on account of depreciation. If the book values be rejected, 
as they must be, it is probable that the value of the property 
would be nearer $100,000 than $200,000. 



22 State Department Reports 

[Vol. 20] Public Service Commission, First District 

It would be impossible from the record to determine the amount 
of the value for rate fixing purposes, but various indications point 
to an amount considerably less than that on which the company has 
been paying dividends. In view of the fact that the company has 
paid substantial dividends, bought back $34,000 of its own bonds, 
has increased its surplus $24,000 during the past six years, and has 
shown nothing as to the value of its property which from various 
indications is much less than the capitalization, I am of the opinion 
that the company has not sustained the burden of proof to show 
that the proposed increase in rate is just and reasonable. 

The company really bases its application not upon the showing 
of actual receipts and expenses, but upon a prospective increase in 
wages. It appears that on September 14, 1918, wages were 
increased from $2.75 to $3 per day, and that on June 1, 1919, 
they were still further increased to $3.60 per day. On the latter 
date, the men were promised an increase to $4.10 per day, the 
minimum rate paid by the companies forming the Brooklyn Rapid 
Transit system, provided that this application should be decided 
in favor of the company. The company claims that this proposed 
increase would leave nothing after paying expenses and taxes 
because the net revenue for the year ending' June 30, 1919, was 
a little over $12,000 and the increase in wages would add that 
much to the payroll. 

It is true that the net corporate income for 1919 showed a 
falling off of about $6,000 from that of 1918; but this was due 
chiefly to the slump in the months of September, October and 
November, 1918, which for some reason seems to have been 
experienced by all street surface companies during that period. 
An examination of the statement of operating results by months 
discloses that the company is now recovering from the slump in 
the first nine months of the year. In the first nine months 
revenues fell off $1,183.49 and expenses increased $5,115.86, 
compared with the corresponding months of 1918, resulting in a 
decrease in operating income of $6,299.35. The last three months, 
however, tell a different story. Revenues increased $1,760.92 
and expenses $2,142.88 so that the operating income is only 



Application of Van Bbunt St. & Ebie Basin R. R. Co. 23 

Public Service Commission, First District [Vol. 20] 

$381.96 lees than in 1918. Judging from the company's experi- 
ence in May and June the next six months should result in a return 
in excess of that for the corresponding months in the preceding 
year provided costs continue at their present level. The expenses 
in June include the increase in wages from $3 to $3.60 but even 
with that increase the company made $1,600 over expenses and 
taxes. If June be taken as normal this would mean an operating 
income of $19,200. After paying interest on funded debt $1,550 
and $10,000 dividends there would still be left $7,650. 

With the proposed increase added the company may still get a 
fair return. In June the company earned $1,600 above expenses 
and taxes. Wages paid in June amounted to $2,769.11 which 
represented an increase of about $500 over what would have been 
paid at the old rate of $3 a day. If this amount be increased by 
$400 more on account of the demanded increase from $3.60 to 
$4.10 or about 14 per cent, we have $3,169.11 as the amount of 
wages which would have been paid in June if the maximum 
demand had been granted. .This would reduce the operating 
income for June from $1,600 to $1,200. At this rate the company 
would earn $14,400 in a year; and after paying interest on 
funded debt and 5 per cent dividends there would still be left 
$2,850 to be carried to surplus. 

Entirely aside from this there is another consideration which, 
in my opinion, requires the rejection of this application. The 
Commission cannot, as a rule, allow an increase in fares based on 
prospective wage increases, especially where the increase is made 
contingent upon an increase in fares. It must consider the com- 
pany's recent experience, its revenues and expenses and the return 
realized on a fair value of the property. If this proves to be 
adequate the company's application should be denied without 
giving any consideration to prospective wage increases. To con- 
' sider prospective expenses and to attempt to foresee what may 
happen or what it is feared may happen, is to act upon conjecture 
rather than on the solid ground of experience. The company must 
pay approximately the market wages for its labor. If after 
paying such wages for a time it can be demonstrated that a fair 



24 State Department Reports 

[Vol. 20] Public Service Commission, First District 

return is not being secured, an application for increased fares 
may properly be made. There may be cases where a company is 
operating at a loss or for financial reasons is unable to pay the 
market price for labor, and where a prospective increase would 
become a legitimate subject for consideration ; but where, as here, 
the company has the ability to pay but fears the reduction or loss 
of its return, I am of the opinion that no increase can be allowed 
on the basis of prospective costs. 

As has been said already this is not an application for an 
increase of rates under subdivision 1 of section 49 of the Public 
Service Commissions Law; but is an application for permission 
to file schedules showing an increased rate on less than thirty 
days' notice. The Commission may grant such permission but 
only " for good cause shown." This, to my mind, has reference 
to some emergency, making it desirable that the schedules go into 
effect in a shorter time than thirty days. For example, if the 
wages had been increased and as a result the company was sus- 
taining a continuing loss, a proper case would probably be 
presented. In the present case, however, I see nothing to indicate 
fiuch an emergency as I think the Legislature had in mind and 
accordingly recommend that this application be denied. 

In accordance with the foregoing opinion, the Commission on 
the same day made the following order: 

By the Commission. — Hearings in the above-entitled matter 
having been duly held on June 9, 1919, July 10, 1919, July 24, 
1919, and July 31, 1919, and having been closed; and the evidence 
taken at said hearings having been duly considered, and it being 
the opinion of the Commission that the company has failed to 
show good cause for the granting of said application and has failed 
to sustain the burden of proof to show that the proposed increase 
in rate is just and reasonable, it is 

Ordered that the said application be and it hereby is denied, and 
that the above-entitled proceeding be and it hereby is discontinued. 



PUBLIC SERVICE COMMISSION 



SECOND DISTRICT 



In the Matter of the Passenger Tariff Filed by the Schenectady 
Railway Company, Designated as its P. S. C, 2 N. Y., No. 
22, Proposing Increased Fares, Rates, Charges, etc. 

In the Matter of the Petition (or Complaint) of Schenectady 
Railway Company under Subdivision 1, Section 49, Public 
Service Commissions Law, and Section 181, Railroad Law, for 
Permission to Increase Certain Passenger Fares 

Case No. 6583 

(Public Service Commission, Second District, May 20, 1919) 

Trolley roads — interurban rates — power of Commission to regulate — when 
system should cot be treated as a unit. 

A condition contained in a consent to the construction and operation 
of an interurban trolley railroad along certain highways in the city of 
Watervliet, granted by the authorities of that city in 1902, placed certain 
limits on the rates of fare which the railroad company should be per- 
mitted to charge between points inside of said city and points in other 
municipalities reached by said railroad ; 

Held, that asuming such limitations to be valid and within the power 
of the local authorities to impose, the rates therein provided are never- 
theless subject to regulation by the Public Service Commission. 

Where a trolley system consists of both urban and interurban mileage 
and is operated as one system, about sixty miles in length, it being found 
that the same patrons were not to any large degree making use of the 
different parts of the system indiscriminately, and there was compara- 
tively little continuous riding over different divisions of the system, 

Held, that the rates of the different divisions should be treated on 
their respective merits, and that for rate-making purposes the system 
should not be treated as a unit. 

It is the legislative policy of this State, as disclosed in section 49 of 
the Public Service Commissions Law, that commutation and other special 
classes of tickets, lower in rate than regular fares, may be maintained on 
interurban trolley railroads. 

H, T, Newcomb, for Schenectady Railway Company. 

25 



26 State Department Repobts 



[VoL20] Public Service Commission, Second District 



Arthur L. Andrews, Corporation Counsel, Albany, for the 
City of Albany and the Chamber of Commerce. 

James A. Leary, for commuters and patrons of Schenectady 
Railway Company between Saratoga Springs and Schenectady. 

John A. Slade, for D. J. Harrington, City Attorney of Saratoga 
Springs. 

J. E. Canfield and W. J. Burnham, for the Chamber of Com- 
merce. 

S. W. Russell, Deputy Corporation Counsel, Watervliet, for 
Mayor Edwin W. Joslin of Watervliet. 

L. D. C. Woodward, President of Watervliet Chamber of Com- 
merce. 

John W. Kenny, for the traveling public of Watervliet. 

Robert J. Lemmon, for the Watervliet Arsenal. 

M. R. Kelly and Frank L. Roberts, for Arsenal employees. 

Frederick E. Draper, for the Troy Chamber of Commerce. 

E. L. McColgin, Managing Secretary Troy Chamber of Com- 
merce. 

Maurice B. Flinn, for the City of Schenectady* 
Walter S. McNab, for suburban residents. 

Maurice B. Flinn, for the Village of Scotia. 

Joseph Gosch, for the Mutual Benefit Association, 

D. Barch, for the Aqueduct Mutual Improvement Association. 

Edward S. Coons, for the Village of Ballston Spa, 



Passenger Taeiff of Schenectady Railway Co. 27 



Public Service Commission, Second District [Vol.20] 

- 

C. I. Johnson, for residents at Ballston Lake. 

Joseph Mason, for commuters. 

Charles H. Collins, for Albany-Schenectady Interurban Asso- 
ciation. 

William H. Sothcott, for Stop 6 community and Schenectady 
branch of Albany Interurban Association. 

Peter K. Best and W. S. Budlong, for middle zone, Troy and 
Schenectady road. 

John G. Brown, for Colonie Interurban Association. 

Alfred S. Bassetts, for residents at Woodlawn. 

P. H. Zimmer, H. W. Bancroft and Kobert MacDonald for 
Arsenal employees. 

A. Edgar Davies, for Alplaus Improvement Association. 

Hill, Chairman. — The Schenectady Railway Company oper- 
ates a street surface railroad, partly urban and partly interurban. 
In the city of Schenectady is an urban system consisting of 21.91 
miles of road and 38.24 miles of track. This may be called 
the heart of the larger system, from which radiate three interur- 
ban lines : one southeasterly to the city of Albany which it enters 
over the lines of the United Traction Company; one easterly to 
the cities of Watervliet and Troy and the village of Green Island, 
which are entered over the tracks of the United Traction Com- 
pany; and the third northerly to Ballston Spa, whence its cars 
proceed still farther to the north over the tracks of the Hudson 
Valley Company, reaching the city of Saratoga Springs. There 
is also certain track radiating from Schenectady called the Subur- 
ban division. Altogether there are 60.04 miles of road, compris- 
ing 114.61 miles of track, divided as follows: Schenectady city 
division (within the city limits of Schenectady) : 21.91 miles of 
road, 38.24 miles of track; Suburban division: 9.17 miles of road, 
17.30 miles of track ; Albany Interurban division : 8.04 miles of 
road, 16.29 miles of track; Troy Interurban diyision: 9.57 miles 



28 State Department Reports 



[Vol.20] Public Service Commission, Second District 



of road, 19.28 miles of track; Saratoga division: 11.33 miles of 
road, 23.01 miles of track. 

At present, the rates of fare charged on this railroad are as 
follows : 

Schenectady City Zone: 

Five cents. Also two and one-half-cent school tickets, sold only 
for the use of school children under seventeen years of age and 
good only between the hours of 8 a. m. and 9:30 a. m., 11:30 
a. m. and 1 :30 p. m., and 3 p. m. and 5 p.m.; not good on Satur- 
days, Sundays, holidays, or during vacation. These school tickets 
are a franchise stipulation. The first franchise containing this 
provision was dated September 29, 1911. The tickets are good 
for city fares only and are sold only in strips of ten for twenty- 
five cents. 

There is no other reduced fare or reduced price ticket sold for 
use within the present Schenectady five-cent zone. 

Albany Tnterurban Division: 

Between Stops 6 and 32%, the fare limits of this division, a 
distance of 7.8 miles, there are three zones: one extending from 
Stop 6 to Stop 14, a distance of 2.44 miles ; one from Stop 14 to 
Stop 23, a distance of 3.36 miles; and the other from Stop 23 to 
Stop 32%, a distance of 2 miles. The fare in each zone is five 
cents, making a total one-way fare of fifteen cents. This is at an 
average rate of one and ninety-five one-hundredths cents per mile. 
The rate per mile in the first zone from Schenectady is two and 
five one-hundredths cents, in the second zone one and forty-nine 
one-hundredths cents, and in the third two and five-tenths cents per 
mile. 

On this division there is sold a commutation book between 
Albany and Schenectady good for a round trip on each working 
day of the month. This book is good for each day of the week 
except Sunday. It is sold for ten dollars and forty cents per 
month with refund for unused portion made under the following 
conditions : " Each ticket used will be charged for at the regular 
round-trip tariff, and if amount is not in excess of monthly rate 
the difference will be refunded. " 



Passenger Tariff of Schenectady Railway Co. 29 

Public Service Commission, Second District [Vol. 20] 

By the use of the commutation hock, and if it is used to its full 
extent, the round-trip cost between Albany and Schenectady, or 
vice versa, would be forty cents, or at the rate of one and thirty- 
four one-hundredths cents per mile. This commutation hook is 
good only between Albany and Schenectady. Books are sold at 
the Schenectady waiting room and refunds made at the Schenec- 
tady office. 

The commutation ticket carries a passenger between the Plaza 
in the city of Albany and the terminus in the city of Schenectady. 
Between these points a passenger is carried over the tracks of the 
United Traction Company in the city of Albany between the Plaza 
and Stop 33, for which this company pays the United Traction 
Company six cents for each passenger carried. Therefore, so 
far as its revenue is concerned, the commutation ticket nets this 
company twenty-eight cents per round trip, or at the rate of one 
and twenty-three one-hundredths cents per mile. 

In addition, there is in effect a round-trip rate of twenty-five 
cents to or from Albany or Schenectady from a point in the middle 
zone on this division. In connection with this, the company's 
tariff contains the following: 

"On and after March 1, 1915, a round-trip excursion ticket, 
good until used, will be sold at Schenectady Railway terminals in 
Schenectady and Albany, N. Y., and at a convenient place in the 
vicinity of Stop 19, provided one can be obtained, at twenty-five 
cents each, good for round-trip transportation between Stop 19 or 
any stop between Stop 19 and Stop 14 1 /> inclusive, and Schenec- 
tady, N. Y. ; or for round-trip transportation between Stop 19 
or any stop between Stop 19 and Stop 22% inclusive, and 
Albany, N. Y." 

These tickets are now on sale at Stop 20 which was the nearest 
available point to Stop 19 where they could be placed on sale. 
This excursion ticket was the result of an order of this Commission. 

Troy Tnierurban Division: 

This division extends from Stop 10 to Watervliet city line, a 
distance of 9.59 miles. It includes three zones: one extending 
from Stop 10 to Stop 23, a distance of 3.39 miles; one from Stop 
23 to Stop .°>tf, a distance of 3.85 miles; and the other from Stop 



30 State Department Reports 



[Vol.20] Public Service Commission, Second District 



37 to Watervliet city line, a distance of 2.35 miles. A five-cent 
fare is charged on each zone, making a total one-way fare on this 
division of fifteen cents. This is at an average rate of one and 
fifty-six one-hundredths cents per mile. The rate of fare per 
mile in the first zone out of Schenectady is one and forty-seven 
one-hundredths cents, in the second one and thirty one-hundredths 
cents, and in the third two and thirteen one-hundredths cents 
per mile. 

A commutation book is sold on this division good between the 
terminus in Schenectady and in Troy, under the same conditions, 
price, and restrictions as that sold on the Albany division. By 
the use of this ticket to its limitations, the round-trip rate between 
Troy and Schenecady or vice versa is forty cents, which is at an 
average rate per mile of one and twenty-four one-hundredths cents. 
This commutation ticket carries a passenger between the Union 
Station in the city of Troy and the terminus in the city of Sche- 
nectady. Between these two points a passenger is carried over 
the tracks of the United Traction Company into the cities of Troy 
and Watervliet between the Union Station and the westerly 
Watervliet city line, for which this company pays the United 
Traction Company six cents for each passenger carried. There- 
fore, as far as its revenue is concerned, the commutation ticket nets 
this company twenty-eight cents per round trip, or at the rate of 
one and five one-hundredths cents per mile. 

In addition, there is an excursion ticket sold from the middle 
zone under the same conditions and at the same price as that 
sold on the Albany division. The company's tariff in this connec- 
tion contains the following : ' 

" On and after May 1, 1912, round-trip excursion tickets, good 
until used, will be sold at Schenectady Kailway terminals in Sche- 
nectady and Troy, N. Y., and at a convenient place in the vicinity 
of Stop 30, provided one can be obtained, at twenty-five cents each, 
good for round-trip transportation between Stop 30 or any stop 
between Stop 30 and Stop 24 inclusive, and Schenectady, N. Y., 
or for round-trip transportation between Stop 30 or any Stop 
between Stop 30 and Stop 35 inclusive, and Troy, N". Y." 

These tickets are at present on sale in the vicinity of Stop 



Passengeb Tabiff of Schenectady Railway Co. 81 

Public Service Commission, Second District [Vol. 20] 

30. This excursion ticket is also the result of an order of this 
Commission. 

Also, there is in use a thirty-five-cent round-trip ticket between 
Watervliet and Schenectady, a distance of 15.02 miles: this ticket 
is good until used. With its use the average rate per mile is one 
and seventeen one-hundredths cents. It is on sale at the ticket 
office in the city of Schenectady and also in the city of Watervliet 

Saratoga Interurban Division: 

This division extends between Alplaus and Ballston Junction, 
a distance of 12.23 miles. It includes four fare zones: one 
extends from Alplaus to High Mills road, a distance of 2.71 miles; 
one from High Mills road to Timesons, a distance of 2.62 miles; 
one from Timesons to Brookline, a distance of 3.66 miles; and 
one from Brookline to Ballston Junction, a distance of 3.24 miles. 
A five-cent rate of fare is charged in each zone, making a single 
one-way fare between Alplaus and Ballston Junction of twenty 
cents, or at a rate of one and sixty-four one-hundredths cents per 
mile. An additional fare of twelve cents is charged from Ballston 
Spa to Saratoga Springs, making the one-way fare Schenectady to 
Saratoga Springs thirty-seven cents; or at the rate of one and 
seventy one-hundredths cents per mile. The rate per mile in the 
first zone from Alplaus is one and eighty-five one-hundredths 
cents; in the second one and ninety-one one-hundredths cents; in 
the third one and thirty-seven one-hundredths cents; and in the 
fourth one and fifty-four one-hundredths cents per mile. 

The tracks in Ballston Spa north of Bath and Front streets are 
owned and maintained by the Hudson Valley Railroad Company. 
A passenger riding in the Ballston fare zone pays five cents ; if 
in the cars of this company, .under an agreement, three cents of 
this fare goes to the Hudson Valley Company and two cents to 
this company. Where the passenger rides on the cars of this com- 
pany within the Ballston five-cent zone south of Bath and Front 
streets, the whole five-cent fare goes to this company. The twelve- 
cent fare between Ballston Spa and Saratoga Springs goes to the 
Hudson Valley Company. 

On this division there is a commutation book sold, good between 



32 State Department Reports 

[Vol.20] Public Service Commission, Second District 

Schenectady and Ballston Spa. This book is sold for the same 
price and under the same conditions and limitations as the one on 
the other interurban divisions, making a round-trip fare between 
Schenectady and Ballston Spa of forty cents, or if the book is used 
to its limitations an average rate of one and twenty-three one- 
hundredths cents per mile. These commutation books are on sale 
in the city of Schenectady only. 

There are additional commutation books sold on this division: 
one, good between Schenectady and Ballston Lake station, for five 
dollars and forty cents per month, with the same limitations and 
restrictions as the other commutation books above described. If 
this book is used to its full limitations, the round-trip rate between 
Ballston Lake station and Schenectady would be twenty and eight- 
tenths cents, or at an average rate of one and twenty-eight one- 
hundredths cents per mile. These books are on sale at Schenec- 
tady and Ballston Lake. 

A monthly school commutation book to be used by school chil- 
dren is also sold on this division: this is good for transportation 
on each school day of the month between the city of Schenectady 
and Ballston Lake station, for four dollars and sixty cents per 
month. This is at a rate of twenty cents per round trip for 
twenty-three school days in the month, or at a mileage rate of one 
and twenty-three one-hundredths cents. These books are on sale 
at Schenectady and Ballston Lake. 

In addition, there is a round-trip ticket sold between Schenec- 
tady and Ballston Lake, good until used, for twenty-five cents. 
This rate was established under order of this Commission. With 
this ticket the rate per mile is one and thirty-four one-hundredths 
cents. While it is for use between these two points, it is used to 
any point within the Ballston Lake fare zone. These tickets are 
on sale in the city of Schenectady and at Ballston Lake station. 

There is another round-trip ticket sold for use between Ballston 
Lake and Ballston Spa, limited to the period between May first 
and September thirtieth, for twenty-five cents. This ticket is at 
the rate of one and fifty-four one-hundredths cents per mile, and 
is on sale at Ballston Lake station and at Ballston Spa. 

The results of operation since the year 1907 are as follows: 



: Tabifv of Schenectady Railway Co. 



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34 



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[Vol. 20] 



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Passengeb Tariff of Schenectady Railway Co. 35 



Public Service Commission, Second District [VoL 20] 

The operating revenue per mile of track in 1907 was $9,550, 
and in 1918 $12,460, an increase in the period of 30.47 per cent, 
while during the same period the operating revenue per car-mile 
increased from twenty-six and nine one-hundredths cents to forty 
and ninety-two one-hundredths cents, a gain of 56.84 per cent. 

The operating expenses in 1907 were $768,614, and in 1918 
$1,245,047, an increase of about 62 per cent. The operating 
expenses in 1917 were $986,233, showing a sharp increase in 
1918 over 1917. 

The operating expenses per mile of track in 1907 were $6,770, 
and in 1918 $10,860, an increase of 60.4 per cent, while per 
car-mile the expense increased in the same period from eighteen 
and eighty-three one-hundredths cents to thirty-five and sixty- 
eight one-hundredths cents, an advance of approximately 90 
per cent. 

The company, according to the terms of the petition and a 
proposed new schedule, propose to increase its fares to the follow- 
ing, namely — 

1. Within the city limits of Schenectady six cents, except for 
school children, and where limited by certain franchise provi- 
sions to five cents. 

2. Within the urban district of Schenectady but outside the 
city limits six cents, except for school children. 

3. Between any point within the city limits of Schenectady 
and any point in the urban district but not within the city 
limits eight cents, except for school children. 

4. To abolish the present zone system on all of the interurban 
lines and substitute therefor a new zone system, consisting of 
zones of substantially one mile each, and charge three cents in 
each zone, with a minimum fare of six cents. 

5. To abolish all commutation and special fares which have 
been mentioned above. 

These larger rates it was estimated would increase the gross 
revenues in the sum of $416,592 per annum. These proposals 
have been modified in some respects by the acceptance of the 
resolution of the Schenectady city authorities, hereinbelow 
referred to. 



86 State Department Repobts 

[VoL 20] Public Service Commission, Second District 

Valuation and Retubn 

The books of the company show a valuation of $7,343,447.93. 
The principal proof given on this subject was the appraisal 
made in August, 1918, by Marwick, Mitchell, Peat & Company, 
chartered accountants. This report was made for the mayor of 
Schenectady, and was therefore presumed to be as unfavorable 
to the company as any evidence likely to be procurable. It 
shows fixed capital of $5,885,091. For the purpose of this case 
the company seems willing to assume a valuation of about that 
amount, as that figure is apparently considered by it to be much 
higher than it needs to entitle it to the rates asked for: this is 
something over $50,000 per mile of track. The company has no 
steam plant, purchasing its power from other sources. In a 
proceeding which the Commission conducted in 1914, relating to 
the Schenectady urban and suburban lines alone, which was 
instituted by complaint of the city and prosecuted by it, there 
was a conceded value to those lines of $3,157,809.14. The 
Marwick report allocates $3,441,029 within the Schenectady 
five-cent zone and $2,443,990 outside of that zone. The com- 
pany's allocation is $5,013,557 to the Schenectady five-cent zone 
and to the interurban properties $2,339,527, the latter figure 
being slightly less than the Marwick figure. If for the present 
purpose we take the figure conceded by Marwick in 1918 of 
$5,885,019, and allocate $3,441,029 to the urban system and 
$2,443,990 outside of that zone, we will as to the former be close 
to the value conceded by the city in 1914, and as to the latter 
we will have approximately the figures given by Mr. Hamilton 
in 1917. For the purpose of this case these figures are probably 
sufficiently correct to avoid injustice, and in the absence of an 
appraisal by the company we will accept them. The urban 
zone referred to includes the track outside the city limits in 
Scotia, Aqueduct, and Rexford, hereinabove referred to as the 
Suburban division. 

In respondent's Exhibit No. 42, $300,000 of the fixed capital 
of the urban lines is arbitrarily transferred to the interurban 
lines in equal amounts, in order to charge those lines with the 
estimated proportion of city track and facilities which they use. 



Passenger Tariff of Schenectady Railway Co. 87 



Public Service Commission, Second District [Vol 20] 

This is perhaps as fair a way as any of arriving at the relative 
earnings of the respective lines. Adopting this method, we can 
now arrive at an assumed valuation for the respective lines, tak- 
ing as a basis of allocation as between the interurban lines the 
proportions given by the company in said exhibit, the result 
being as follows : 

Urban lines as above $3,441,029 

Less $300,000 transferred as stated 300,000 

$3,141,029 

Interurban lines $2,443,990 

Plus the $300,000 transferred 300,000 

2,743,990 

$5,885,019 



Allocating still further on the basis of the figures given in 
Exhibit Xo. 42, reduced proportionately and dropping fractional 
figures, we find — 

Urban lines $3,141,000 

Albany division 833,000 

Troy division 800,000 

Saratoga division 1,111,000 

$5,885,000 



If an 8 per cent return is computed on these valuations we 
find the return required by the various lines would be — 

Table A 

Urban lines $3,141,000 @ 8%=$251,280 

Albany division 833,000 @ 8%= 66,640 

Troy division 800,000 @ 8%= 64,000 

Saratoga division 1,111,000 @ 8%= 88,880 

Total $470,800 



38 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Turning now to the earnings previously shown, we find that prior 
to 1912 the gross income never reached the level shown in Table 
A; that in 1912 it approximated it ($464,572) ; in 1913 it some- 
what exceeded it ($499,000); in 1914 it was $391,811; 1915, 
$324,638; 1916, $376,297; 1917, $373,863; and in 1918 it 
dropped to $94,957. During all of this period there was on 
the whole a gradual increase in gross revenues ranging from 
$1,065,320 in 1907 to $1,427,778 in 1918. The great decrease 
in gross income was due therefore not to failing business, because 
that was growing, but to increase in operating expenses. The 
greater part of this increase is attributable to wage increases 
ordered by the National War Labor Board, only part of which 
appear in the 1918 account. 

A statement showing allocation of income by divisions, for 
the year 1918, from the company's books, shows the following: 



Passexger Tabiff of Schenectady Railway Co. 



39 



Public Service Commission, Second District 



[Vol. 20] 






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State Department Reports 



[Vol. 20] 



Public Service Commission, Second District 



This statement is interesting as showing a gross income from 
the Albany division of $98,392, from the Troy division $7,872, 
from the Saratoga division $22,133, and a deficit on the Schenec- 
tady local lines of $33,245. 

Combining these figures with the estimated required return 
on an 8 per cent basis as previously shown, we can arrive at the 
relative needs of the different portions of the system based on 
the experience of 1918, as follows: 

Table B 





Urban 
lines 


Albany 
division 


Troy 
division 


Saratoga 
division 


Gnu income r^Quiiwd .......,.,, 


8251.280 
*88,$46 


866,640 
98.392 


864.000 
7,872 


888,880 


Gross income received, 1918 


22,133 








8284,525 


t831,752 


856,128 


866,747 



Total required, 8470,800; total received, 895,152; net required, 8375,648. 
* Deficit f Credit. 

But the operations of 1919 promise to be much less favorable. 
The Commission has made an examination of the books and 
reports of the company, and based on the experience of Decem- 
ber, 1918, and January, 1919, we get the following: 

Statement of Estimate of Results of Operation fob the 
Coming Yeab With a Portion of Interurban Cars 
Included in City Investment. (Figures in italics denote 
deficits.) 





Total of 
system 


Albany 
division 


Troy 
division 


Saratoga 
division 


City 
division 




81,497,657 
1,415,287 


8246,215 
161,841 


8116,667 
127,850 


8137,335 
114,439 


8997.440 




1,011,157 








882,370 
90,000 


884.374 
9.630 


811,188 
7.200 


822,896 
12,330 


813,717 




60,840 








87,630 


874,744 
IBS 


818,888 
91 


810,566 
94 


874,667 








1,800 


898 








88,880 


874.621 


818,474 


810,472 


876,449 






Deductions from cross income: 

Other deductions . . . r , - 


8133,800 

6,500 

12,458 


812,876 

601 

1,152 


813.032 

633 

1.213 


817,167 

834 

1,598 


891.225 
4,432 
8,495 






Total deductions from gross income. 


8152,758 


814,129 


814,878 


819,599 


8104,152 


Net corDorate income 


8161,588 


860,492 


888,868 


89,187 


8179,801 







Passenger Tariff of Schenectady Railway Co. 41 



Public Service Commission, Second District [Vol. 20] 

For the purposes of this case, however, we will proceed on the 
figures of 1918, as any increases which we allow will be less than 
the needs there shown. 

Schenectady Urban Lines 

Table B shows a gross income required for these lines of 
$251,280, whereas a deficit of $33,245 was realized. Adding 
the two we get a requirement of $284,525. The gross revenues 
for 1918 were $950,973.56, including the so-called suburban 
service and crediting the urban fares on the interurban cars to 
the city system. Assuming that a six-cent fare will produce a 
20 per cent increase in revenue, the increased revenue from such 
a rate would be $190,194.71. The full theoretical increase 
would probably not be realized, as some allowance must be made 
for decreased patronage by reason of the advanced rate, but we 
will let the figure stand. There seems to be no reason why this 
increase should not be granted. 

Certain of the earlier municipal consents to construction of 
urban lines imposed a limitation of five cents on city fares, but 
they applied only to a relatively small part of the present track- 
age. All of the subsequent grants contained only the limitation 
that the provisions of the Railroad Law respecting rates of fare 
should be complied with. Inasmuch as the provisions in question 
applied to all of the city trackage, it would seem questionable 
whether the original conditions which affected only a compara- 
tively small portion of the trackage which could not be used as a 
unit survived the later grants. Public Ser. Com. v. Westchester 
St K. K. Co., 206 BT. Y. 209. 

However that may be, the city authorities have now in effect 
waived the limitation referred to for the time being to the extent 
of allowing consideration by the Commission of an increase from 
five cents to six cents. The terms of this waiver are acceptable 
to the company and modify its scheme of rates, the basis of the 
waiver being that the company shall be limited to a six-cent fare 
in all parts of the former five-cent zone which extended at various 
points beyond the city lines. 



42 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Albany Interurban Division 

Table B shows that the Albany Interurban division earned a 
gross income of $98,392 against the theoretical requirement of 
only $66,640, and even if we compare this last figure with the 
prospective gross income for 1919 amounting to $74,621, we 
find it about $8,000 in excess of the theoretical requirement. 
This presents the question whether the system should be treated 
as a whole without regard to the varying profitableness or unprof- 
itableness of the various divisions, or whether each division 
should be treated on its individual merits. We are reminded that 
in the case of urban lines the entire system is treated as a unit 
without regard to the varying lengths of ride and density of 
traffic. This is unquestionably true, and as concerns urban fares 
the unit system has been embodied in our statutes which provide 
that " No corporation * * * shall charge any passenger 
more than five cents for one continuous ride from any point on 
its road, or on any road, line or branch operated by it, or under its 
control, to any point thereof, or any connecting branch thereof, 
within the limits of any incorporated village or city." R. K. Law, 
§ 181. Under this provision the urban passenger traveling one 
mile or less pays the same fare as a passenger traveling ten times 
the distance. It might be called the American as distinguished 
from the European method, where the value received for each ride 
is measured out with much precision. For urban traffic this 
apparently loose method of charging for transportation has some 
decided advantages. It makes a unit fare which is convenient 
alike for the company and the patron; and a very important 
consideration, it encourages the development and occupation of 
outlying and suburban districts for residence purposes and dis- 
courages crowding the inner sections. It must be remembered 
also that when the trolley system came into vogue its growth and 
development were largely based on this idea, and the outlying 
lands of our cities have been developed and occupied largely in 
reliance upon a continuance of the unit fare. Already, however, 
in many cities zone systems are being advocated and in some 
cases adopted. Whatever may be the best method as to urban 



Passenger Tariff of Schenectady Railway Co. 43 

Public Service Commission, Second District [Vol. 20] 

traffic, I think the arguments in favor of treating an interurban 
system as a unit and imposing the same rate of fare on different 
divisions regardless of their relative profitableness must be con- 
sidered in each case according to its. particular facts. In a case 
where the same people are found to be using the various divi- 
sions indiscriminately, or where the riding over different divisions 
is found for the most part to be continuous, a uniform rate would 
not be unjust, where otherwise it might be. It may be claimed 
that rates of fare should not and practically can not be dissected 
and considered on their individual merits, and we are aware that 
the United States Railroad Administration has practically 
adopted this view by promulgating a uniform rate of fare on all 
railroads within its jurisdiction. But when we turn to the statute 
for guidance we find that each rate, fare and charge must be 
separately and distinctly specified in the tariff schedules, so that 
in case of complaint each may and does become practically an 
issue in itself. We find also that the determination of such an 
issue rests upon the justness and reasonableness of the given 
rate " with due regard among other things to a reasonable average 
return," etc. Uniform rates arbitrarily fixed would thus seem to 
be the antithesis of that which the New York statutes demand. 

For the purpose of determining the character of the traffic 
over the Schenectady system, a check was made under the direc- 
tion of the Commission in December, 1918, which indicates that 
of the westbound passengers on the cars of the Albany division 
about 8 per cent continued through Schenectady to points on the 
Saratoga division, while of passengers moving in the 
opposite direction about 16 per cent continued through. This is 
substantially all of the interdivision traffic, there being practi- 
cally none between either the Albany or Saratoga divisions and 
the Troy division. Every fact in the case would seem to demand 
that the rates on the Albany division be considered on their 
merits as applied to that division. Inasmuch as the patrons of 
this division are now paying even more than their full share, 
we can find no justification for increasing these rates. 



44 State Department Hepobts 

[Vol.20] Public Service Commission, Second District 

Trot Division 

This division extends from Schenectady city line to Water- 
vliet city line. The Schenectady urban fare carries the passen- 
ger to a point some distance outside the city line known as 
Stop 10. From this point to Watervliet city line is a distance of 
9.59 miles, divided into three zones: one extending from Stop 10 
to Stop 23, a distance of 3.39 miles; the next extending to Stop 
36, 3.85 miles; and the third extending to Watervliet city line, 
2.35 miles. A five-cent fare is charged in each zone. From 
Watervliet city line the cars proceed through Watervliet and 
Troy over the lines of the United Traction Company, with a six- 
cent fare. The present through fare is therefore five cents in 
Schenectady to Stop 10, then three five-cent zones, then one six- 
cent zone: total 26 cents. 

The fares charged on this division conform to certain condi- 
tions imposed by the city of Watervliet in a consent or franchise 
granted by its common council April 30, 1902, which in effect 
fixed maximum fares over the entire Troy division, and the city 
now claims that this condition is binding on the Commission and 
prevents it from regulating or increasing the rates thus fixed. 

It is noticeable that this provision imposes no maximum on 
the fare to be charged within the municipality itself, but does 
seek to fix a maximum for fares between points within the munic- 
ipality and points outside. Its practical effect, if the condition 
is lawful, is to regulate the fares over the entire Troy division, 
and it is claimed that within the doctrine of the Quinby Case, 
223 N. Y. 244, the Public Service Commission is without author- 

* 

ity to increase the rate. Whatever may be the power of a munic- 
ipality to fix a maximum fare within its own boundaries, as a 
condition of giving its consent to construction, and whatever the 
law may be as to the power of the Public Service Commission to 
regulate and reduce or increase such a rate, it would seem to be 
extremely doubtful that one municipality has any power to regu- 
late rates outside of its own boundaries. A consideration of the 
practical results likely to flow from the application of such a power 
would seem to condemn it outright on grounds of public policy. 



Passenger Tabiff of Schenectady Railway Co. 45 



Public Service Commission, Second District [Vol 20] 



The effect would be that any municipality, however small, located 
on the line of an interurban trolley road, however large, could 
impose rates applicable to the entire system. 

The regulation of rates is recognized in the Quinby case to be 
a governmental and thus a legislative function. 

The f ares which were the subject of the Quinby case were purely 
local, and the contract or consent was given in 1890, and had 
been expressly recognized by the Legislature by section 173 of the 
Railroad Law in 1910. 

m 

But the provision of section 18 of the Constitution referred to 
in the Quinby case, and also in the later Glens Falls Case, 225 
N. Y. 216, would seem to have no application to the consent here 
under consideration which was granted in 1902, by reason of the 
effect of section 23 of article III of the Constitution, which pro- 
vided that sections 17 and 18 should not apply to any bill which 
" shall be reported to the legislature by commissioners who have 
been appointed pursuant to law to revise the statutes." It is 
well known that the Railroad Law of 1890 and the amendments 
of 1892 were enacted upon the report of the commissioners to 
revise the statutes, appointed pursuant to chapter 289 of the 
Laws of 1889, and it was pursuant to those laws that the consent 
of the village of Watervliet was given. The laws of 1890 and 
1892 having been enacted upon reports of commissioners as 
stated, were not required by the Constitution to contain a require- 
ment for the consent of local authorities, from which it follows 
that the provision in the statutes of 1890 and 1892 for such con- 
sent, being there not by virtue of constitutional requirement but 
as an exercise of the uncontrolled will of the Legislature, the 
concept of constitutional restraint which formed the ground of 
the Quinby decision is not here applicable. The Glens Falls case 
is a clear authority for the proposition that except for the consti- 
tutional provision referred to, the Legislature has delegated to 
the Commission all the power which it had over rates, except 
such as it had expressly reserved to itself. We think, therefore, 
that even if the condition referred to was a valid one, the rates 
therein provided were and are subject to regulation by this Com- 



46 State Department Reports 



[Vol. 20] Public Service Commission, Second District 



mission. Tonawanda Complaints v. International Railway Co., 
107 Misc. Rep. 151. 

Commutation Rates 

The commutation books as above stated ate quite limited as to 
their operation, and the rates resulting from them run from one 
and five one-hundredths cents to one and twenty-four one-hun- 
dredths cents per mile, provided each ticket is fully used within 
the time limit for use. As commutation rates go the present 
rates are not low; they average higher than the steam railroad 
rates of one and ten one-hundredths cents per mile generally in 
force, and higher than rates in use on other interurban trolley 
roads in the neighborhood. 

The proposal of the company to abolish the commutation books 
seems to be based on the opinion of its management that such 
rates as to trolley roads are wrong in principle and should be 
discontinued as a matter of general policy. The views of the 
management were presented with some elaboration by the witness 
Barnes, general manager of the road, thus : "We have this peculiar- 
ity as compared with any other marketable commodity, that it is a 
necessity with us to manufacture the commodity which we offer 
for sale, namely, transportation, at the moment when it is con- 
sumed. It is totally impossible for us to utilize the idle hours 
so far as the consumption of our product is concerned for the 
production at a uniform rate of the product to meet the demand 
when it comes. We must manufacture at the time when the 
demand occurs. That necessitates a disproportionately large 
investment in power equipment, in rolling stock, and a dispro- 
portionately large number of platform employees and employees 
of all kinds to handle this rush hour transportation so called. By 
disproportionate, I mean with respect to what would be necessary 
were it distributed evenly over a ten, twelve, and eighteen or 
twenty-four hour day. Consequently, the fact is that with a 
highly concentrated peak-load, the cost of producing transporta- 
tion for that peak-load is very much higher than the cost of 
producing the transportation for the load at any other time of 
the day." 



Passenger Tariff of Schenectady Railway Co. 47 

Public Service Commission, Second District [Vol. 20] 

Furthermore, it is urged in the brief of respondent's counsel 
that there is no analogy between such rates on steam roads as com- 
pared with trolley roads; that such traffic on steam roads is a 
byproduct ; that while the cost to a steam road of performing addi- 
tional service is slight, the cost to the trolley road increases in 
full proportion to the increase in traffic flowing from commutation 
business. While we are impressed that there is much reason in 
this presentation of the subject, still the proposition that on prin- 
ciple commutation rates on interurban trolley roads are unjust 
and unreasonable and should be abolished, presents a direct chal- 
lenge to the clearly defined policy which we find embodied in the 
statutes of this State. 

Thus section 49 of the Public Service Commissions Law, after 
clothing the Commission with power to fix the " rates, fares or 
charges " to be demanded by common carriers, proceeds in a sepa- 
rate paragraph to clothe it with like power to fix the rates to be 
charged for " excursion, school or family commutation, commu- 
tation passenger tickets, half fare tickets for the transportation of 
children under six years of age, or any other form of reduced rate 
tickets." There is thus clearly disclosed a legislative policy by 
which different rates are to be fixed for what may be termed 
"regular" fares, and for commutation and other special classes 
of lower rate tickets. Beading both provisions together, they can 
only be construed to admit of differentiation in the classes of fares 
mentioned and expressly to sanction commutation fares on electric 
roads. 

To this policy we must adhere, and the proposed elimination 
of the commutation and special rates is therefore disapproved. 

Turning now to the proposed schedules of the Troy and Saratoga 
divisions, which are sufficiently similar in their revenue needs and 
other aspects to be treated substantially alike, we find a proposed 
rate of three cents per mile, based on a new zone layout which in 
substance makes a separate zone of each mile, with a minimum 
fare of six cents. This zone system and mileage rate is continued 
also over those parts of the interurban routes which lie within 
the Schenectady urban zona This is clearly inadmissible because 



48 State Department Reports 



[Vol.20] Public Service Commission, Second District 



the rate for all passengers within the urban zone must be the same. 
The interurban rates must begin where the urban rates end. 

Summary 

We find that to increase rates sufficiently high to meet the the- 
oretical requirements of Table B will call for an extremely large 
increase on the Troy and Saratoga divisions. This increase would 
be largely out of proportion to the increase from five cents to six 
cents in the urban zone. An increase such as would be thus pro- 
vided would we think be of doubtful advantage to the company by 
reason of the certain decrease in patronage which would result, 
and perhaps of doubtful justice because of the smaller propor- 
tionate increase which has been accepted by the company in the 
urban zone. The latter arrangement is for the limited period of 
one year, and we feel that a disposition of this case must be made, 
based not on the theoretical requirements shown above but on the 
treatment of the company's demand for relief from an emergency 
standpoint, in a manner which will yield a substantial increase, 
well within its established requirements, with a view to reopening 
the case at the end of the year when the results of such changes 
as shall be authorized have been tried experimentally for the 
period named. 

In this view of the case we think it would be unwise to make 
the radical change in the zone system suggested by the company. 
The existing zones have remained unchanged for many years and 
the patrons of the road have adapted themselves to them. We 
have prepared a tariff for these two divisions based on the existing 
zones, but with what may be called a floating zone feature which 
neutralizes to a large degree the inequality in fare brought about 
by a rigid zone system through the imposition of a full zone rate 
for the passenger traveling only in parts of zones. This tariff 
shows an increase of approximately 20 per cent in rates and will 
yield approximately $50,000. This added to the $190,000 esti- 
mate of increased income in the interurban zone will give a total 
increase in revenue of $240,000. This is assuming that all of the 
theoretical increase will be realized, but this is by no means sure 



Passbngeb Tariff of Schenectady Railway Co. 49 



Public Service Commission, Second District 



[Vol. 20] 



to be the result This increase does not correspond with what we 
have shown to be the apparent requirements of the company based 
on the 1918 experience. By reason of increased wages and power 
costs, the gross income which will be left after charging operating 
expenses will be considerably smaller than in 1918. These rate 
increases, however, will give the company some return on invest- 
ment and enable it to meet its most pressing financial needs. 

The company may put into effect a six-cent fare in the Schenec- 
tady urban zone, and may also put into effect on three days' notice 
the annexed tariff for the Troy and Saratoga divisions. No 
change will be allowed in the commutation rates; and all such 
rates, together with school and special rates on the entire system, 
will remain unchanged. No increase will be allowed on the 
Albany interurban division except as the six-cent fare in the city 
of Schenectady effects an increase of one cent 

An order will be entered accordingly. 

All concur. 

Tariffs referred to in the foregoing memorandum : 

Schenectady Railway Company, Teoy Division 



^ > *v ><( ^ Between 


S 

a 

& 

}■ 


PrBSEMT Fares 


Proposed Farm 


and ^ s « Vs 


1 


2 


3 


4 


5 


6 

6* 
6* 


7 
6* 


1 


2 


3 


4 


5 

~6* 

11* 


6 

6* 

6* 


7 


Schenectady 

to 

Morgan avenue 


u 




6* 
20% 










Morgan avenue 
to 

Niakayuna 


10* 


5* 






6* 
6* 


12* 
20% 


7* 
40% 








Niakayuna 

to 
Lathams 


15* 


10* 


5* 


6* 

6* 
6* 

11* 


18* 

20% 


12* 
20% 


7* 
40% 






lathama 

to 
Boulevard 


5 
6 


20* 


15* 


10* 
10* 
10* 

16* 


24* 

20% 


18* 
20% 


12* 

20% 


7* 
16|% 




Wiawall's 


20* 
20* 

26* 


15* 

15* 

21* 


24* 

20% 


18* 
20% 


12* 
20% 


7* 
16!% 




Watervliet 


24* 
20% 


18* 
20% 


12* 
207, 


7* 
161% 




Green Island 

and 

Troy 


30* 
20% 


24* 

20% 


18* 
20% 


13* 
18% 


6* 



State Dept. Kept. — Vol. 20 4 



50 



State Department Reports 



[Vol. 20] 



Public Service Commission, Second District 



Schenectady Railway Company, Saratoga Division 



^^N^Bctween 


S 

c 

1 

}• 

5 

1 

I 6 

1 

J 7 


Present Fares 


Proposed Fares 




and n^ 


1 
5* 

10* 

15* 

20* 

25* 

31* 

37* 


2 

5* 
10* 
15* 
20* 
26 f 
32* 


3 

5* 
10* 
15c 
21 f 
27* 


4 

5* 
10* 
16* 
22* 


5 

5* 
11* 
17* 


6 

6* 
12* 


7 
6* 


1 


2 


2 


4 


5 


6 

6* 

12* 


7 


Schenectady 

to 

Alplaus 


6* 
20 % 












Alplaus 

to 

High Mills Road 


12* 
20% 


7* 
40% 










High Mills Road 

to 

Timesons 


18* 
20% 


12* 
20% 


7* 
40% 








Timesons 

to 
Brookline 


24* 

20% 


18* 
20% 


12* 
20% 


7* 
40% 






Brookline 

to 

Ballston Junction 


30* 
20% 


24* 

20% 


18* 
20% 


12* 
20% 


7* 
40% 




Ballston Junction 

to 

Leonards 


36* 

18% 


30* 

16|% 


24* 

12*% 


18* 
12*% 


13* 

15% 




Leonards 

to 

Saratoga Springs 


42* 


36* 
15% 


30* 
12*% 


24* 

10% 


19* 
12% 


6* 



In the Matter of the Complaint of Edgar Rowe. of Nassau, 
Rensselaer County, against Columbia and Rensselaer Tele- 
phone and Telegraph Company, as to Charge made him, 
in Addition to the Regular Monthly Rate, for Certain Tele- 
phone Calls 

Case Xo. 6809 

(Public Service Commission, Second District, Mav 27, 1919) 



Telephone rates — order of April 1, 1919, modified. 19 State Dept. 
Rep. 188. 

By the Commission. — By petition filed May 10, 1919, the 
Columbia and Rensselaer Telephone and Telegraph Company 
requested the Commission to grant a rehearing in this case. 
Such petition was granted by order dated May 13, 1919, and 
a rehearing was therein fixed to be held in the Commission's 



Rowe v. Columbia & Rensselaeb Tel. & Tel. Co. 51 

Public Service Commission, Second District [Vol. 20] 

office, No. 58 North Pearl street, in the city of Albany, on 
Wednesday, May 21, 1919. 

At the hearing the following named persons appeared and were 
duly heard: Mr. Ransom H. Gillet of Albany, N. Y., for the 
Columbia and Rensselaer Telephone and Telegraph Company, 
and Mr. Ralph M. Cooper of Nassau, N. Y., for Edgar Rowe, 
complainant. 

It appearing of record that the order of the Commission dated 
April 1, 1919 (19 State Dept. Rep. 188), requiring said telephone 
and telegraph company to establish the following regulations: 
" The rates and rentals charged include service to subscribers and 
their immediate family. This does not include employees or 
boarders who will be charged non-subscriber rate unless speaking 
on employer's business. Subscribers and their immediate family 
may use the telephone for others without extra charge" would 
in effect open the way whereby any subscriber's telephone could 
be ufied by any person whom a subscriber might elect to permit 
to use it for any purpose whatsoever and thereby deprive the said 
telephone and telegraph company from receiving revenue to which 
it is justly entitled to receive from non-subscribers, it is therefore, 
Ordered, That the ordering clause in the Commission's order 
of date of April 1, 1919, in Case No. 6809, be and it hereby is 
modified to read : 

" Ordered, That Columbia and Rensselaer Telephone and 
Telegraph Company be and it hereby is authorized to amend its 
local general tariff P. S. C. — N. Y. — No. 1, currently in 
effect, and therein provide for the changing of regulation 2 as 
shown on page 2 under caption Rules and Regulations, to read 
as follows : ' The rates and rental charges applying for 0ttb- 
scribers' service entitle subscribers and members of their imme- 
diate families and employees and boarders to unlimited calls, 
restricted to the personal business of the subscribers and the 
members of their immediate families, to all stations bearing the 
designation of exchanges within the respective local service 
areas, without other charge. All other calls will be charged to 
subscribers at non-subscriber rates.' " And it is 



52 State Department Repobts 

[Vol. 20] Public Service Commission, Second District 

Ordered further, That said Columbia and Rensselaer Tele- 
phone and Telegraph Company shall file, on not less than three 
days' notice to the public and the Commission and to be effective 
not later than June 5, 1919, a supplement to its local general 
tariff P. S. C. — U". Y. — No. 1, and therein establish the regu- 
lation hereinbefore authorized, and upon receipt by the Com- 
mission of said amendatory schedule this case will be closed. 



In the Matter of the Petition of Rutland Railroad Company, 
under Section 54 of the Railroad Law, as Amended by Chapter 
564 of the Laws of 1915, for Consent to the Discontinuance 
of its Woods Falls Station, Clinton County. Renewal of 
Petition — United States Railroad Administration 

Case No. 6280 

(Public Service Commission, Second District, May 29, 1919) 

Discontinuance of freight service conditionally allowed. 

The railroad company renewed its application for leave to discontinue 
its freight and passenger service at a station used only for pulp wood 
shipments at which station there is no agent or station building. There 
is no expense connected with the passenger service. Held, that the 
passenger service should be continued; that the freight service switch 
should be discontinued except during the pulp wood shipping season, 
the time of discontinuance to be agreed upon by the railroad company 
and the shippers. 

J. F. Carrigan, assistant superintendent, Ogdensburg divi- 
sion, and J. A. Proctor, travelling freight agent, for Rutland 
Railroad Company, petitioner. 

J. M. Cantwell, as attorney for petitioner. 

Shedden & Pierce (by Walter C. Pierce) for P. N. Kennedy, 
and Mountain Lumber Company, in opposition. 

M. Y. Ferris, in behalf of a number of residents of Clinton 
county as appears by petition filed at the hearing (Feb. 5, 1919). 



Petition of Rutland Railroad Co. 53 



Public Service Commission, Second District [Vol. 20] 



Fbnnell, Commissioner. — This is a renewal of an applica- 
tion made by the Rutland Railroad Company in November, 
1917, for leave to discontinue a side track and freight service at 
Woods Falls station, Clinton county, N. Y. Upon the original 
application, which was denied, the privilege of renewing the 
same was given at any time, after October 1, 1918. The present 
application is an amendment of the original one, and includes a 
request to discontinue the passenger station as well. Woods 
Falls is a flag station without a station building or an agent. 
It is two and one-half miles west of Mooers Forks and three 
and three-tenths miles east of Altona. 

The company urges that the station be discontinued for the 
reasons that there is only a limited amount of freight business; 
that few passengers are accommodated; that the curve and 
grade at the place of the switch produce a dangerous condition. 

One shipper testified that he had several hundred cords of his 
1918-1919 cut ready to ship from the station and that he had 
not finished shipping the 1917-1918 cut; also that he had about 
10,000 cords of wood uncut, the outlet of which would be Woods 
Falls station ; that it costs from two dollars to two dollars and fifty 
cents a cord to draw pulp wood from Woods Falls to either 
Mooers Forks or Altona. 

Of course it is true the eastbound trains are running against 
the points of the switch but, with a single track road, traffic in 
one direction or the other must run against switch points. The 
conditions surrounding this switch do not seem to be any more 
dangerous than is usual with switches of the same class. The 
passenger traffic is very small but caring for it requires no 
expense except the cost of stopping and starting a train when a 
passenger desires to board or alight. The passenger service 
should be continued as at present. However, as the freight 
traffic seems to consist almost entirely of pulp wood shipments, 
it would seem to be a reasonable provision that the switch be 
spiked and out of service except during those portions of the 
year when the bulk of the wood is being shipped. If the com- 
pany was given notice it could in a few hours have the spikes 



54 State Department Repobts 

[VoL 20] Public Service Commission, Second District 

drawn, the switch lamp restored and the switch in operation. 
The switch should not be maintained indefinitely for the pur- 
pose of getting out a few cars of pulp wood a year. The pulp 
wood dealers should proceed expeditiously to get out the pulp 
wood tributary to this switch so that the same may be discon- 
tinued. The company should be permitted to discontinue the 
use of the switch, except during the pulp wood shipping sea- 
son, — the time of discontinuance to be agreed upon by the 
railroad company and the pulp wood shippers and in case of 
their inability to agree the Commission will, upon request of 
either the railroad or the shippers, fix the time of discontinuance. 
After a reasonable time for shipments of the 1919-1920 cut 
the railroad may again move to have this switch discontinued. 

Hill, Chairman, and Irvine and Kellogg, Commissioners, 
concur; Barhite, Commissioner, not present. 



In the Matter of the Complaint under Sections 71 and 72, Public 
Service Commissions Law, of George W. La*ne, as Mayor 
of Corning, against Crystal City Gas Company as to Pro- 
posed Increase in Price of Natural Gas Furnished Customers 

Case No. 6340 

(Public Service Commission, Second District, May 29, 1919) 

Jurisdiction — lack of authority of Commission over foreign corporation pro- 
ducing natural gas in sister State — Commission cannot discriminate 
between different classes of consumers as to rates. 

Neither this Commission nor the Interstate Commerce Commission 
can require a Pennsylvania corporation producing natural gas in Pennsyl- 
vania to transport it and deliver it in the State of New York to a 
distributing company in this State. Such transportation and sale is, 
therefore, a matter of private contract between the Pennaylvania produc- 
ing corporation and the New York distributing corporation. 

Such a contract should provide a definite and certain price for gas 
sold, and it should not provide compensation in the way of a percentage 
of the revenues of the distributing company. 



Lane i\ Crystal City Gas Co. 55 



Public Service Commission, Second District [Vol. 20] 



A 8 the law has recently been declared by the Appellate Division, this 
Commission is without power, in order to aid in the conservation of 
natural gas, to discriminate between different classes of consumers. 
(People ex rel. Pavilion Natural Gas Co. v. Public Service Commission, 
not yet reported.) It should not undertake to do indirectly what it is 
forbidden to do directly, by authorizing higher rates for large consumers 
than for small consumers. 

On an examination of the evidence a rate is fixed of sixty -five cents 
per 1,000 cubic feet, with seven cents discount for prompt payment, the 
rate to remain in effect for one year. 

Justin V. Purcell, corporation counsel, for complainant ; Hon. 
George W. Lane in person. 

Thomas F. Rogers and Neile F. Towner, attorneys for 
respondent. 

Benjamin W. Wellington, president, William M. Guernsey, 
superintendent, and George S. Goff , general manager, for respond- 
ent. 

E. B. Reeser, vice-president, and W. H. Richards, treasurer, 
Potter Gas Company. 

B. F. Whitbeck, consulting engineer of respondent. 

Irvine, Commissioner. — In this case the Commission made an 
order July 9, 1918 (17 State Dept. Rep. 334), following a 
complaint by the mayor of the city or Corning against a pro- 
posed increase in price of natural gas furnished by the 
respondent, directing cancellation of the tariffs making said 
increase and the restoration of its former rates. VII Public 
Service Commission, Second District, Reports, 180. August 
22, 1918, a further order was made authorizing either com- 
plainant or respondent on or after December 1, 1918, to apply 
for a vacation or modification of that order. The reason for 
denying the increase was that in the past the company on its 
former rates had made a fair return on the value of its property, 
and that while the new tariffs had been filed on the theory that the 
respondent would no longer be permitted to supply gas for indus- 
trial purposes and its income would thereby be seriously reduced, 



56 State Department Reports 



[VoL20] Public Service Commission, Second District 

the supply for industrial purposes had not then been cut off and 
that there was not then existing any order of the United States 
Fuel Administration requiring the respondent to discontinue such 
service. Subsequently, on November 8, 1918, the United States 
Fuel Administration made an order applying to this respondent 
and to other companies in similar territory restricting the use of 
natural gas by consumers to 12,000 cubic feet per month except 
under special permit to be issued by the Fuel Administrator of 
the State of New York. This order in effect so restricted domestic 
consumption and practically excluded industrial use. The respond- 
ent thereupon asked to reopen the case as provided in the August 
order. Further hearings were held and much evidence received 
as to operating revenues and expenses under the new conditions. 
The case was not submitted until about March 1, 1919. Since that 
time it has not been possible to make a definite determination 
because of the uncertainty as to continued Federal regulation 
coupled with uncertainties as to the future cost of gas to the 
respondent. 

Federal regulation through the war time fuel administration 
has now ended. All the gas supplied by the respondent is pur- 
chased by it from the Potter Gas Company, a Pennsylvania cor- 
poration, which produces its gas from fields in Pennsylvania and 
delivers through long transmission lines the Corning supply at 
the city limits not far from the State line. While the transporta- 
tion of natural gas through pipe lines from one State to another 
State is interstate commerce (Public Utilities Commission for 
State of Kansas v. Landon, 39 Sup. Ct. Rep. 268 ; Matter of Penn- 
sylvania Gas Co., 225 N. Y. 397), Congress has not taken over the 
regulation of that particular industry. Indeed, it has Qxpressly 
excepted it from the operation of the Interstate Commerce Com- 
mission Law. Interstate Commerce Commission Law, § 1. It is 
quite clear, therefore, that this Commission can not require a 
Pennsylvania corporation producing gas in Pennsylvania to trans- 
port it and deliver it in the State of New York, and that the 
Interstate Commerce Commission is likewise powerless. If there 
exists such a power, and it seems that there does, it is a power 



Lane v. Chystal City Gas Co. 57 

Public Service Commission, Second District [Vol. 20] 

vested in Congress and by it not yet exercised. There is no avail- 
able source of supply for the Crystal City Company at present 
except through purchasing from the Potter Gas Company. It is 
possible that this Commission might fix a price at which the Potter 
Gas Company should sell if it sold at all, but as the Commission 
can not require it to supply gas in the State of New York, the exer- 
cise of such a power to fix the price, if such power exists, would 
merely say, sell at this price or keep out of the State. The situa- 
tion manifestly does not demand such action, and regulation of 
price between the Potter Company and the Crystal City Company 
becomes, so far as the Commission is concerned, an academic 
question; and so far as the two gas companies are concerned, a 
matter of private contract. 

The Potter Gas Company supplies a number of distributing 
companies and consumers in the State of Pennsylvania. It 
also sells gas to the Elmira Water, Light and Railroad Com- 
pany, furnishing gas in the city of Elmira; and to the Addi- 
son Gas and Power Company, supplying the village of 
Addison; as well as to the respondent, supplying gas in the city 
of Corning. As in the case of many natural gas contracts between 
producing and distributing companies it has in the past received 
a certain percentage of the revenues of the distributing com- 
pany as the price for gas sold. The Commission has heretofore 
commented on the undesirability of this basis of payment. On 
this application the question was sharply presented because, con- 
sidering that if the Crystal City Company is entitled to an 
increase in order to enable it to earn a fair return on its invest- 
ment, to permit the increase would automatically increase the 
price paid to the Potter Gas Company, so that in order to give 
the Crystal City Company $1,000 additional income it might be 
necessary to award it $3,000 additional revenue. On the other 
hand, the producing company may justly be entitled to an 
increased price for gas sold to the distributing company, and to 
permit this would require an additional increase in rates to the 
consumer which might yield to the distributing company an unduly 
high return. This matter was brought to the attention of the 



58 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Potter Gas Company and it was requested so to modify its con- 
tract as to provide a flat rate per thousand cubic feet for gas sold 
to the respondent. The Potter Company recognized the justice 
of this request, but insisted that with its failing fields, the con- 
stantly increasing expense of developing new wells with lesser 
production, and with its asserted ability to dispose of all the gas 
now produced to Pennsylvania customers nearer its field at less 
expense but at higher prices than it has been receiving from the 
three New York communities, the price to the New York com- 
munities must be increased if it is to continue to supply them. 
Accordingly it made an offer to the Crystal City Company to 
supply of gas at thirty-eight cents per thousand cubic feet, and 
this offer has been accepted by the Crystal City Company. As 
is to be inferred from what has already been stated, the Commis- 
sion has no control over this contract. There is no evidence of 
any community of interest or ownership between the Potter 
Company and the Crystal City Company. In fact the evidence 
is that there is no such community. It was a matter of bargain 
and sale, and the Commission is satisfied from what it knows 
of the negotiations that the Crystal City Company has obtained 
as good a bargain as it was able to obtain. In considering this 
case, therefore, we must treat the new price of thirty-eight cents 
a thousand cubic feet as an established operating cost to the 
Crystal City Company. 

The rate proposed in the application of the Crystal City Com- 
pany is based on the theory of conservation, to wit, seventy cents 
net for the first 5,000 cubic feet, eighty cents net for consumption 
between 5,000 and 12,000 cubic feet, one dollar per thousand for 
all over 12,000 cubic feet per month. Every one having any 
familiarity with the natural gas industry realizes that the supply 
is failing, and the Commission is aware from evidence in this and 
in other cases that in the communities supplied in this State by 
the Potter Company there is in cold weather, when gas is most 
needed, an inadequate supply. The object of presenting these 
tariffs, which offer what may be termed an " inverted block rate," 
is solely to conserve the supply. It is cheaper to supply a single 



Lank v. Ckystal City Gas Co. 59 

Public Service Commission, Second District [Vol. 201 

large consumer than a number of small consumers, but it was hoped 
that by making the expense greater for higher consumption 
indirectly, industrial use would be prevented and domes- 
tic use curtailed. One matter which has delayed the 
decision of this case was the pendency in the Appel- 
late Division of proceedings on certiorari to review an 
order of the Commission undertaking to accomplish directly 
what the inverted block scale seeks to accomplish indi- 
rectly. The order referred to divided consumers into two classes, 
industrial and domestic, and undertook to protect the domestic 
consumer by forbidding use by industrial consumers during the 
winter months, with certain exceptions not necessary here to set 
forth. 

Within the past two weeks the Appellate Division has annulled 
this determination of the Commission, and in effect held that 
the Commission is without power to " overcome the shortcomings 
or failure of nature " by " depriving some consumers of gas in 
order that others may have more." People ex rel. Pavilion Nat- 
ural Gas Company v. Public Service Commission, Second Dis- 
trict, not yet reported. Pending a review of this decision by the 
Court of Appeals, or if the decision should be affirmed then fur- 
ther legislation, the Commission is not disposed to attempt to do 
indirectly what the court has said it had no power directly to 
accomplish. However disastrous the consequences may be to the 
natural gas industry and more particularly to domestic consumers, 
the Commission feels required under present circumstances to 
fix a uniform rate for all consumers, but this should be fixed 
for a rather limited period merely awaiting the result of further 
judicial or legislative action. 

The case has, therefore, entirely changed its aspect since its 
submission: first, by the removal of the Federal restrictions on 
use; and second, by the determination of the Appellate Division 
in the Pavilion case. As the evidence, however, is as complete as 
it can probably be made on the essential elements of a rate case, 
it is deemed better to make a decision now rather than to hold 
further hearings and incur further delay and expense without the 
promise of having much additional light thrown on the problem. 



60 State Department Reports 

[Vol.20] Public Service Commission, Second District 

The first step in ascertaining the rate is to obtain some figure 
upOn which a fair return is to be based. In the decision of July 
9, 1918 (VII Public Service Commission, Second District, 
Reports, 180), supra, there was no finding as to this amount, but 
the conclusion was that, taking the evidence most favorable to the 
company, it was not entitled to an increase. In the present record 
there is evidence of reproduction cost new, but this method of 
valuation is not by the Commission deemed satisfactory where 
better evidence is available. Proposed Schedule of Rates Fixed 
by Iroquois Natural Gas Company, decided April 24, 1919, 19 
State Dept. Rep. 209. In the instant case much study has been 
devoted by experts of the Commission to the calculation of actual 
investment costs as reported year by year to the Commission. To 
the cost of tangible fixed capital has been added 15 per cent of the 
calculated original cost as legitimate and actual intangibles. This 
amounts to $12,862. Working capital is also added. This 
amount has been ascertained by taking the sum of the balances 
of the accounts covering material and supplies, accounts receiv- 
able, special deposits and similar items, and as of the year ending 
December 31, 1918, it amounts to $31,986. The result of this 
method of computation is as follows : 

Tangible fixed capital $112,182 

Intangibles 12,862 

Working capital 31,986 



$157,030 



The Commission does not commit itself to this as a perma- 
nent valuation of the property of the company. It is perhaps a 
low valuation, but as it is evident that the rate to consumers must 
in present conditions be considerably increased, and as like con- 
ditions forbid at this time the fixing of a rate for any extended 
period, we shall proceed on that figure in estimating a return. The 
company's estimate of reproduction cost new is $180,536, and that 
of the city $146,912. 

An item involving in its very nature a large element of con- 



Lane v. Crystal City Gas Co. 61 

Public Service Commission, Second District ' [Vol. 20] 

jecture is the probable volume of gas to be sold under the new 
rates. Domestic consumers used from May 1, 1918, to April 
30, 1919, 215,000,000 cubic feet. What industrial consumption 
there may be under the new rates or the extent of the reduction 
of domestic consumption caused thereby are matters of pure guess 
work. It is assumed that industrial consumers even without legal 
restraint will recognize the justice of conserving the remaining 
supply for domestic use. That there will be some industrial con- 
sumption is certain. Estimating, therefore, the probable con- 
sumption for the forthcoming year at 225,000,000 cubic feet, and 
the amount of gas to be purchased at 237,000,000 cubic feet, the 
difference being allowed for " leakage," which term is used to 
indicate the difference between the gas supplied at the meters of 
the Potter Company and the gas sold through meters of con- 
sumers, we are enabled to reach the following prospective income 
account The figures, except as already stated, are derived from 
the evidence offered by the corporation. 

Average net price to consumers per thousand cubic feet 58 cents. 
Kevenue from sale of 225,000 thousand cubic feet gas . . $130,500 
Other operating revenue (1918 figures) 860 

Total operating revenue $131,360 

Eevenue deductions : 

Gas purchased, 237,000 thousand cubic feet 

at 38 cents $90,060 

Depreciation 5,609 

Other operating expenses 20.461 

Taxes 4,061 

Uncollectible bills 149 

120,340 



$11,020 
Rate of return on investment of $157,030 (estimated 
original cost without deduction of depreciation 
reserve) ^% 



62 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

It must be remembered that the natural gas industry is not 
one capable of future development. Some time the supply will 
be exhausted. In the language of old wills, "Realizing the 
certainty of death and the uncertainty of the time thereof," some 
allowance must be made for the amortization of the existing 
investment. For this reason the Commission has taken the fore- 
going estimate of value without deducting depreciation reserves. 
To have done so would have led to somewhat intricate and 
necessarily inexact counter allowances without effect on the 
result. 

An order should be entered authorizing the company to file a 
tariff on one day's notice based on a rate of fifty-eight cents net 
to all consumers. The gross rate may be fixed at sixty-five cents 
with seven cents discount for prompt payment, and this rate 
should remain in effect for one year and thereafter until other- 
wise ordered by the Commission. 

Hill, Chairman, and Fennell and Kellogg, Commissioners, 
concur; Barhite, Commissioner, not present. 



In the Matter of the Complaint, under Sections 71 and 72 
Public Service Commissions Law, of the Mayor of the City 
of Saratoga Springs, against Adirondack Electric 
Power Corporation, as to Prices for Gas Furnished the 
Public in Said City 

Case No. 6538 

(Public Service Commission, Second District, May 29, 1919) 

Increase of gat rates allowed for limited period. 

Where the superseding schedule filed by the company practically 
increases the price of gas to consumers from one dollar and thirty 
cents per 1,000 cubic feet to one dollar and fifty-three cents per 1,000 
cubic feet and the figures Bhow that even at the increased rate, the net 
earnings of the company will be a fraction tinder four per cent which is 
less than the average for the five-year period next preceding, the increased 
rates will be approved for a period of one year from the date of the 
order which will be entered herein. 



Mayor of Saratoga Springs v. Adirondack El. P. Corp. 03 

Public Service Commission, Second District [Vol. 20] 



John Slade, as attorney for complainant. 

Brackett, Todd, Wheat & Wait (by B. P. Wheat), as attorneys 
for respondent. 

D. C. Burke, city attorney of Oneida, in person. 

Edward E. Eddy, in behalf of Business Men's Association of 
Saratoga Springs. 

Hill, Chairman. — The Adirondack Electric Power Corpora- 
tion furnishes illuminating gas in the city of Saratoga Springs. 
Prior to August 15, 1918, its flat schedule for gas in said city 
was one dollar and forty-five cents per 1.000 cubic feet, with 
10 per cent discount for prompt payment of bill. It has put 
into effect a tariff which became effective on the last-named date, 
under which it is charging one dollar and seventy cents per 
1,000 for the first 25,000 cubic feet and one dollar and fifty 
cents per 1,000 for all over 25,000 cubic feet, with a like dis- 
count. Substantially all consumers take less than 25,000 cubic 
feet a month, so that the relative prices in the two schedules 
may be considered as one dollar and thirty cents per 1,000 in 
the former schedule as against one dollar and fifty-three cents 
per 1,000 in the superseding schedule. 

The superseding schedule has been made the subject of a 
complaint on behalf of the mayor, who claims that such price 
is excessive and unjust and unreasonable. The complaint has 
been heard by the Commission, evidence taken and briefs by 
the respective sides submitted. 

Valuation 

It is difficult to get a satisfactory rate base in this proceedii.^, 
due to a lack of coherence in thr records of the company. It 
is true that there are on record in various places in the Com- 
mission's files a number of different appraisals, and it is only 
by qualification and reconciliation of the various sets of figures, 
followed by comparison, that it is possible to determine some- 



64 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

what arbitrarily upon a total which it seems fair to accept. In 
order to accomplish this result it was necessary to estimate the 
probable depreciation which has accrued upon the depreciable 
property of the company between the time as of which the several 
valuations were made and July 1, 1918, which appears to have 
been the date of the valuation filed by the company in the case. 
For the purpose of the calculations herein, depreciation has 
been computed by applying to the valuations depreciable property 
rates which the experience of this Commission has found to be 
applicable to gas companies of like character to this company. It 
is pointed out that said valuations are assumed to represent the 
depreciated value at the time at which such valuations were 
made, and that if the depreciation rates had been applied to the 
estimated original cost the aggregate depreciation allowances 
would have been somewhat larger and the depreciated value at 
July 1, 1918, correspondingly lower. 

Reference No. 1: 

The valuation introduced in evidence by the respondent in 
this case upon the replacement value theory at July 11, 1918 
(presumably replacement and value new at present prices) 

shows $602,932 50 

With a depreciated replacement value of 381,681 34 

Some figures that this Commission has dealt 

with recently relative to gas construction 

(Niagara Light, Heat and Power Company) 

contain a reference to the effect that present- 
day prices are 30 per cent in excess of normal. 

If the above figures were reduced on the same 

basis the results would be — probable normal 

cost 463,794 23 



Depreciated normal cost $293,601 03 

Adding to the latter as working capital 25,000 00 

Produces $318,601 03 



Mayor of Saratoga Springs t\ Adirondack El. P. Corp. 65 

• 

Public Service Commission, Second District [Vol. 20] 

Reference No. 2: 

In a report made by the receivers of the Saratoga Gas, Elec- 
tric Light and Power Company the " value " of the gas property 
as of January 11, 1909, is said to have been. . . $287,940 70 
It is assumed that the above amount represented 

the then apparent or depreciated value. Cal- 
culations have been made to estimate the 

depreciation which has accrued upon the 

property represented by the above amount 

from 1909 to July 1, 1918, upon the basis as 

stated hereinbefore, and which show such 

accrued depreciation aggregating 62,367 50 



Leaving the depreciated value at July 1, 

1918 $225,573 20 

There were additions to the 
company's fixed capital be- 
tween 1909 and 1918 ag- 
gregating $15,331 01 

And is estimated that depre- 
ciation has accrued with re- 
spect to such additional 
property to the extent of. . 2,082 24 

Leaving as the depreciated value of the fixed 
capital additions between 1909 and 1918, the 
amount of 13,248 77 



making the total depreciated value in connec- 
tion with this valuation $238,821 97 

If to this figure is added the estimated work- 
ing capital of 25,000 00 



the amount of $263,821 97 

State Dept. Rept. — Vol. 20 5 



66 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

is arrived at, this being about $55,000 less 
than the figure arrived at in the reference. 

Reference No. 8: 

Incident to the 1907 rate case, Mr. Forstall, an engineer wit- 
ness for the company, fixed a valuation for the plant 

in the amount of $275,340 00 

And it is assumed that said valuation was 

based upon the then present value, which 

would contemplate observed depreciation as 

computed by the engineer at that time (1907). 

Calculations tending to show the estimated 

depreciation from 1907 to July 1, 1918, inclu- 
sive show such estimated depreciation to 

aggregate 70,513 90* 

Leaving as depreciated value at July 1, 1918. . $204,826 10 

There have been additions to the property be- 
tween the approximate date of that valuation 
and December 31, 1918 (it was not possible 
to segregate the expenditures for 1918 so as 
to show the total to July 1) aggregat- 
ing $22,419 39 

And it is estimated that 
depreciation with respect to 
said property additions has 
accrued to the extent of. . . 4,277 64 

Leaving as the depreciated value of the fixed 

capital additions between 1907 and 1918... 18,141 75 

making a total of $222,967 85 

and if the estimated allowance for working 

capital of 25,000 00 

Is added there results the amount of $247,967 85 



Mayor of Saratoga Springs v. Adirondack El. P. Corp. 67 

Public Service Commission, Second District [Vol. 20] 

Reference No. 4: 

Mr. A. D. Adams, another engineer witness in the 1907 rate 
. case, presents a valuation showing a value new of $216,788, and 

a depreciated value of $153,062 00 

Mr. Adams failed to include, however, one-half of 

the value of the office building and lot and the 

value of the lot at the plant, and if the figures 

used in the valuation made by the receivers are 

inserted to remedy this deficiency 17,400 00 

There results an aggregate of $170,462 00 

Against this figure, also, the estimated accrued 

depreciation with respect to such depreciable 

property between 1907 and July 1, 1918, has 

been applied, amounting to 45,073 10 

Which leaves a depreciated value at July, 1918, 

of property represented by the valuation as of 

1907 in the amount of $125,388 90 

If to this amount is added the cost of additions to 

the property between the approximate date of 

that valuation and December 

31, 1918, of $23,419 39 

Less the estimated accrued 

depreciation upon such prop- 
erty 4,277 64 

18,141 75 

There results the sum of $143,530 65 

To which is added the allowance for working 

capital of 25,000 00 

Giving a total of $168,530 65 

Reference No. 6: 

The actual cost records are very obscure and it is difficult, or 
almost impossible, 'to secure any accurate index as to what the 



68 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

original cost of the property of this company may have been. In 
the report of the Saratoga Gas, Electric Light and Power Company 
for the year ended December 31, 1910, however, the amount . 

of $81,509 97 

Is shown as directly applicable to the gas depart- 
ment, with an additional sum of 136,458 84 



Under the caption " Bonds issued for property 

which from the books of the company we are 

unable to divide between gas and electric". 

Even if this latter entire amount is assumed 

to be applicable to the gas department, there 

would be a total of but $217,968 81 

As the undepreciated cost in 1910, while the addi- 
tion of the actual expenditures made between 

1912 and 1918, amounting to 15,331 01 



Will produce but . $233,299 82 

as the undepreciated cost at the latter date. 
Adding to this the working capital as in the other 

calculations in the amount of 25,000 00 



There results a total of $258,299 82 



Inasmuch as records are not available to show the nature of 
the investment of the greater part of this amount, it has not been 
possible to estimate the amount of the probable depreciation appli- 
cable to the property represented. 

Following is a recapitulation of the results of the several calcu- 
lations shown above: 

Reference No. 1 : 

Depreciated replacement value (reduced 30 per 

cent), plus working capital $318,601 03 



Mayor of Saratoga Springs v. Adirondack El. P. Corp. 69 

Public Service Commission, Second District [Vol. 20] 

Reference No. 2: 

Valuation (presumably depreciated) as shown by 

receivers in 1909, adjusted to show the fixed 

capital additions to 1918 and the estimated 

accrued depreciation upon the whole for the 

period 1909 to 1918, plus working capital $263,821 97 

Reference No. 8: 

Valuation (presumably depreciated) made by 

Engineer Forstall (company witness) incident 

to 1907 rate case, adjusted to show the fixed 

capital additions from 1907 to 1918, and the 

estimated accrued depreciation upon the whole 

for the period 1907 to 1918 plus working 

capital .. 247,967 85 

Reference No. £: 

Valuation (depreciated) made by Mr. Adams 

(witness for the village of Saratoga Springs) 

incident to 1907 rate case adjusted to show 

fixed capital additions to 1918 and estimated 

accrued depreciation upon the whole from 1907 

to 1918, plus working capital 168,530 65 

Reference No. 5: 

Apparent book cost 1918 (with no depreciation 

deducted), plus working capital 258,299 82 



It will be noted that the results arrived at in the first three 
calculations are not widely divergent, and in view of the known 
lack of reliability in the book figures reflected in reference No. 5, 
and also the lack of knowledge as to the qualifications of witness 
Adams, whose valuation has been used in reference No. 4, it is 
felt that the similarity between the results arrived at in the above 
mentioned first three references is the most tangible and reliable 
basis available for the purposes of this proceeding, in view of 



70 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

which it would appear that a rate base of $250,000 would be 
reasonably correct and not unjust. I have therefore adopted a 
property valuation of $250,000, to which we will add $25,000 
for working capital, thus producing a sum upon which return 
should be based of $275,000. 

Earnings 

For the year 1918, assuming that the old schedules remained 
in effect for the entire year, the following operating statement 
has been prepared : 

Estimated gross revenue based on old sched- 
ules (actual gross revenue for 1918, is not used 
on account of the fact that during the last four 
and a half months of that year the new sched- 
ules were in effect) $66,506 54 

Actual operating expenses and taxes 53,650 26 

Gross income $12,856 28 

If we allow the same amount for depreciation, 
viz 4,500 00 

there remains a balance of $8,356 28 



applicable to dividends and surplus. 

On May sixteenth the case was opened and further evidence 
taken with a view to determining the probable trend of revenue 
and operating expenses which would indicate the probable out- 
come for the year 1919. These figures show that for the first 
three months of the current year the revenue at the new rates was 
$15,062 against $12,892 at the old rates for a like period in the 
year 1918, while the operating expenses were $11,929 as com- 
pared with $10,263 in the year 1918 and gross income for the 
period $3,133 as compared with $2,629 for the year 1918. 
There is thus indicated an increase in gross income due to 
the new rates of 19 per cent for the entire year amounting to 
$2,442, which added to the gross income of 1918, as shown 



Mayor of Saratoga Springs v. Adirondack El. P. Cori\ 71 

Public Service Commission, Second District [Vol. 20] 



above amounting to $12,856 gives us $15,298 as the estimated 
gross income for 1919, and if we deduct from this the same 
amount of depreciation, viz, $4,500, we get $10,798 as net 
income applicable to dividends and surplus. 

From all the evidence there is no reasonable prospect that the 
company's showing will be any better than this for the year 1919. 
Applying this resultant figure to the valuation of $275,000 we 
have a return on investment of 3.9 per cent. 

The net earnings without deduction for depreciation for a 
five-year period, including the foregoing estimates for 1918 and 
1919, appear to be as follows: 1915, $15,751; 1916, $18,178; 
1917, $20,435; 1918, $12,856, old rates; 1919, $15,298, new 
rates. 

It is thus apparent that the increased rates fail to keep the net 
earnings up to the average for the period, and also that there 
have been no excessive earnings during the period which can be 
spread over present or future earnings. This graphic decline in 
net earnings is attributable to the sharp advances in general oper- 
ating costs, more particularly in the costs of coal, oil and labor, 
which took their rise in 1917 and have since continued. It has 
been hoped that the increased costs would by this time show a 
tendency to decrease, but so far this hope has been disappointed, 
and there are no facts in the record or within the knowledge of 
the Commission from which it seems reasonable to assume that 
there is any immediate prospect of material decreases in the 
costs of anv of these items. 

As shown above, the prospective net earnings for 1919 are a 
fraction under 4 per cent in the way of return on investment, 
which no one will claim is an adequate rate. The Commission 
has the power to authorize an increase price greater than that 
proposed by the company. It is doubtful, however, whether a 
higher price would not have the effect of turning away custom 
to such an extent as to avail nothing in increased net earnings. 
Furthermore, the evidence discloses that the Adirondack Com- 
pany, which in addition to its gas business in Saratoga Springs, 
supplies that city with electricity, encouraged the city author- 



72 State Department Reports 

[Vol.20] Public Service Commission, Second District 

ities to substitute electricity for gas in its street lighting. This 
business yielded the gas department in 1916 over $1,100 in 
net earnings. While we cannot criticize the company for practi- 
cally abandoning this business in favor of its electric lighting 
department, still we think the fact may be properly taken into 
consideration in determining the merits of this controversy, be- 
cause, if the company sees fit to pursue a policy as between the 
two departments which tends to superseding gas output with 
electric light output, it is questionable to what extent it can 
require the consumers of gas to contribute towards the result- 
ing loss. 

The Commission will not under the circumstances increase the 
rates beyond those specified in the superseding schedule under 
consideration. These rates are approved for the period of one 
year from the date of the order which will be entered and there- 
after until the further order of the Commission. 

Irvine, Fennell and Kellogg, Commissioners, concur; Barhite, 
Commissioner, not present. 



In the Matter of the Petition of the United States Railroad 
Administration — New York Central Railroad, as to 
changes at Akron Falls and Pembroke Stations 

Case No. 6827 

(Public Service Commission, Second District, June 3, 1919) 

Application for leave to employ caretaker at station instead of agent denied 
— economy in management — the rights and the conveniences of the 
public must be considered as of first importance. 

Application is made for leave to dispense with a station agent who 
also acts as express agent and telegraph operator at a station which has 
been established for many years and to put in his place a caretaker in 
order to save expense. If the agent were dispensed with passengers 
would have to pay their fares and check their baggage on the train. 
Incoming freight would have to be prepaid and outgoing freight would 



Petition of United States Railboad Administration 73 

Public Service Commission, Second District [Vol. 20] 

not be oil led until it reached a point where an agent was in charge who 
would mail receipt to the Bhipper. The telegraph office would be closed. 
The agent's pay as fixed by the United States officials is forty-eight cents 
per hour for eight hours and seventy-two cents per hour for overtime. 
The agent also draws a small amount as express agent. For the month 
of April, 1019, the agent's pay amounted to $164.50. For the year 101S 
the freight business amounted to $14,007.74, passenger tickets sold to 
$571.88, milk business $2,429.72, and express business $520.80. Held, that 
while more care and attention should be given to the management of 
public utilities in order to correct deficiencies in income, the interference 
with the rights and conveniences of the public should be one of the last 
and not one of the first means employed to correct the situation, and it 
appearing from the evidence in this case that the public would be greatly 
inconvenienced by dispensing with the agent at the station in question 
the application is denied. 

Maurice C. Spratt and H. W. Huntington, attorneys, for the 
United States Railroad Administration. 

Edward A. Washburn, attorney for Town of Pembroke 
and certain individuals opposed to making Pembroke a non- 
agency station. 

J. L. Taylor, President of the Village of Akron and represent- 
ing Akron Board of Trade. 

Wilbur J. Childs in person. 

Barhitb, Commissioner. — This is an application by the United 
States Railroad Administration, among other things, to dispense 
with the services of an agent at the station known as Pembroke 
on a branch line of the New York Central Railroad running from 
Canandaigua to North Tonawanda. Pembroke is a small unin- 
corporated village of about 250 inhabitants, surrounded by a 
rich and prosperous farming community. The station with its 
present advantages has been established for a great many years. 
The Railroad Administration proposes not to abolish the station, 
but to dispense with the services of the station agent, who per- 
forms not only the usual duties of that position but acts also as 
express agent and telegraph operator. To be relieved of the 
expense of this agent, coupled with the claim that the public can 
be well served if the station is put in charge of a caretaker, 
who can be hired at a much less figure than the amount paid 



74 



State Department Eeports 



[Vol. 20] 



Public Service Commission, Second District 



the agent, is the basis of the petition on the part of the United 
States Railroad Administration. 

The reasons why this application should not be granted, which 
are so marked in this case, are present and apply with a greater 
or less degree of force to similar requests now pending before 
this Commission and make this memorandum applicable to those 
cases. 

The business transacted at Pembroke station from 1913 to 
1917 inclusive, appears by the following table furnished from the 
records of the company: 



• 


Number 

shipments 

Lt. Ks. 1*. 

sent and 
received 


Cnr lota 
sent and 
received 


Freight 
earnings 


Tickets 
sold 


Ticket 
revenue 


1913 


1.409 
1,377 
1.256 
1.300 
1,202 


114 
151 
110 
87 
100 


$4,300 23 
6.071 30 
3. 908 71 
3.206 76 
2,430 82 


2.545 
2.530 
2,685 
2.697 
2,517 


$909 83 


1914 


892 94 


1915 


803 42 


1916 


773 18 


1917 


730 35 







The above figures do not include a small amount of business 
transacted . at Pembroke on behalf of Falkirk, a non-agency 
station. As it is proposed to change the name of Falkirk to 
Akron Falls and make an agency station at that point, no 
further business from that station will accrue to Pembroke. 
In 1918 the freight business amounted to $14,007.74, pas- 
senger tickets to $571.88, milk business $2,429.72. The 
express business amounted to about $43.40 per month or 
$520.80 per year. On the freight business $8,736.24 was 
received for road material used in the repair of the state roads 
in that vicinity, leaving $5,271.50 received from ordinary 
freight. The present agent also acts as express agent and tele- 
graph operator. If the company dispenses with his services the 
telegraph office must be closed. It was suggested that the care- 
taker to be employed in place of the agent might act as express 
agent, but there is no assurance that such will be the fact. The 
present agent is paid the amount fixed by the United States 



Petition of United States Railroad Administration 7.* 

Public Service Commission, Second District [Vol. 20] 

Government officials, forty-eight cents per hour for eight hours, 
and seventy-two cents per hour for overtime, and the station 
is open for practically twelve hours and thirty minutes per 
day, making a daily wage for the station agent of $7.08. 
Besides, he draws a small amount as agent for the express 
company. For the month of April, 1919, the agent actually 
received $164.50. The first proposition of the petitioner pro- 
posed to employ a caretaker in place of the agent during the 
winter months, whose duties would principally consist of caring 
for the lighting and heating of the station whenever necessary. 
Later, as the case developed, the proposition was changed and 
it was proposed that the caretaker should do everything but bill 
the freight and sell the tickets. If the caretaker is to perform 
substantially the duties of the agent, and the salary now paid to 
the latter is reasonable in amount, it is quite difficult to under- 
stand how much money will be saved simply by changing the 
title of this representative of the road. 

Under the proposed new system all passengers from Pembroke 
must pay their faTe on the train; all baggage to be checked 
must be placed where it can be readily reached by the train 
crew, and the passengers must, after boarding the train, reach 
the train baggagemaster in order to procure a check. All in- 
coming freight must be prepaid; outgoing freight will not be 
billed until it reaches a point where there is an agent, who will 
be expected to make out the proper receipt and return it by mail 
to the shipper. Under the present system, when freight is 
delivered to an agent it is put into possession of the railroad 
company and in case of loss or damage the receipt of the agent 
furnishes very substantial evidence of the condition, kind and 
quantity of the goods when received by the company. Under 
the proposed system, a substantial interval must elapse between 
the time the shipper surrenders the possession of the property and 
the time when an agent returns the receipt by mail, and it might 
be very difficult to establish any change in the condition, quantity 
or kind of goods which occurred in the meantime. There is evi- 
dence to the fact that frequently goods are stolen in transit, ship- 



76 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

ments to different parties become mixed, and that some portions of 
a shipment are delivered at the proper station and other portions 
carried to the wrong station. Naturally, the patron of the road 
depends upon the local agent to adjust these various troubles ; a 
letter to the company would not bring very speedy results. It 
appears that the freight service is so bad at the present time 
that shippers have been compelled to patronize the express 
company with its higher rates. One florist and importer and ex- 
porter of bulbs testified that his shipments and receipts of 
freight are mostly by express on account of the condition of the 
freight service. His shipments weigh at times from one thou- 
sand to fourteen hundred pounds ; one in value was worth $2,800. 

Without pursuing the details further, it is quite evident that 
to dispense with an agent at Pembroke would seriously incon- 
venience the public in its use of that station. 

The rates charged by the railroads for both passenger and 
freight service have been enormously increased within a very 
short period of time. If, with such added burdens upon their 
patrons, the roads are not now a success financially, the first 
thought should not be to still further add to the load of the 
public by decreasing the. quality of the service. During the 
period of the war every patrotic citizen was not only willing, but 
anxious to undergo inconveniences and privations if they were 
deemed necessary or helpful by the public authorities in reaching 
a successful issue of the conflict. Now that business matters 
are resuming their normal conditions, more care and attention 
must be given to the management of public utilities for the pur- 
pose of correcting deficiencies in income, and an interference 
with the rights and conveniences of the public should be one 
of the last and not one of the first means employed to correct 
the situation. 

All concur. 



Whitehead v. Niagara Falls Gas & Electric L. Co. 77 



Public Service Commission, Second District [Vol. 20] 



In the Matter of the Complaint of George W. Whitehead, as 
Mayor of the City of Niagara Falls, against Niagara Falls 
Gas and Electric Light Company, as to Gas Kates and as to 
Service 

Case No. 6548 

(Public Service Commission, Second District, June 12, 1910) 

Gas rates — temporary adjustment at one dollar and ninety cents per 1,000 
cubic feet less fifteen cents for prompt payment pending reorganization 
of company. 

The company increased its rates, effective August 15, 10 IS, so as to 
charge two dollars and twenty cents per 1,000 cubic feet, less 10 per cent 
discount for prompt payment, or one dollar and ninety-eight cents net. 
The old rate was one dollar and ninety cents per 1,000 cubic feet, less 
twenty cents discount for prompt payment for less than 2,000 cubic feet 
per month and one dollar and forty-four cents, less twenty cents for prompt 
payment for consumption between 2,000 and 20,000 cubic feet and for 
20,000 cubic feet and over one dollar and twenty cents, less twenty cents 
for prompt payment. The electric business is small and the company's 
main source of income is gas. The company was incorporated in 1000 
and took over in 1001 a gas plant built in 1860. The net operating 
revenue of the company has never been sufficient to meet interest charges 
and the deficit as shown on its books as of December 31, 1018, is $476,143. 
The existing gas plant is entirely inadequate, the generating apparatus 
obsolete and uneconomical, the mains cover only part of the territory 
offering a good field for business. The company expected to use its 
increased rates as an inducement to attract capital in order to enlarge 
its business and improve its plant, expecting a return not only upon its 
present physical value but also upon its deficit as representing going 
value. It would appear that there is a serious question as to whether the 
company would be entitled to any allowance for going value as a shortage 
of return has continued during its whole life and the deficit far exceeds 
the original investment. Held, that a price of gas should be determined 
in this case on the basis of what the public will pay for the service 
rather than go without it altogether and that a temporary adjustment 
of the rates be made at one dollar and ninety cents for 1,000 cubic feet 
with fifteen cents per 1,000 discount for prompt payment and that the 
tariff schedule of the company which is the subject of complaint be 
canceled. 



78 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

i 

Robert J. Moore, corporation counsel, Niagara Falls, as attor- 
ney for complainant. 

Dudley & Gray (by Mr. Gray), as attorneys for respondent. 

Hill, Chairman. — The complaint is on behalf of the city of 
Niagara Falls against both the service and rates with respect 
to gas. 

Prior to August 15, 1918, the schedule of rates for gas was as 
follows : 

Under 2,000 cubic feet per month, one dollar and ninety cents 
per 1,000, less twenty cents for prompt payment. 

2,000 to 20,000 cubic feet, one dollar and forty-four cents, less 
twenty cents. 

20,000 and over, one dollar and twenty cents, less twenty cents. 

The superseding tariff, which is the subject of complaint, and 
which became effective August fifteenth, provides for a uniform 
rate of two dollars and twenty cents per 1,000 cubic feet, less a 
discount of 10 per cent for prompt payment, or one dollar and 
ninety-eight cents net. 

The respondent company was incorporated in the year 1900 and 
about a year thereafter took over the plant of the Niagi^a Falls 
Gas Company, which was constructed about 1860, and has ever 
since continued to operate the same. It also has a small electric 
light plant. 

The Commission has no records before it covering the first six 
years of the plant's operations, but beginning with the year ended 
June 30, 1906, the company has filed fairly complete annual 
reports either with this Commission or with its predecessor, the 
Commission of Gas and Electricity. From these reports has been 
compiled a table showing the principal items of the company's 
income account for the period from June 30, 1905, to Decem- 
ber 31, 1918. 

It will be noted that the company's electric business, which did 
not begin until 1907, has been inconsiderable, although showing a 



Whitehead v. Niagara Falls Gas & Electric L. Co. 79 

Public Service Commission, Second District [Vol.20] 

tendency to gradual increase in both gross and net revenue up to 
1915. Since then there has been a falling off. The company's 
main source of income is its gas business. The revenues from 
this source have slowly increased, and up to 1916 the tendency 
was for the expenses to increase rather less rapidly, leaving a grow- 
ing net operating revenue, which was, however, never sufficient to 
meet interest charges. In 1917 the operating income from gas 
sales dropped suddenly from $21,128 to $887, and in 1918 there 
was a net operating loss of $8,039. This great decrease in operat- 
ing income appears to have been due to a sudden rise in operating 
costs. At no time has the total operating income from both 
electric and gas operations been sufficient to pay the full interest 
charges, and the company's book deficit has, therefore, steadily 
mounted from $31,234 at June 30, 1906, to $476,143 at Decem- 
ber 31, 1918. 

The sudden increase in the deficit during 1917 was due to an 
adjusting entry which made a total extra charge in that year of 
$260,864. This included a reduction in fixed capital assets of 
$193,093; in miscellaneous investments of $11,184; in materials 
and supplies of $203; and an additional appropriation to the 
depreciation reserve of $56,385. These charges, of course, repre- 
sent losses which were not properly a part of the 1917 business, 
but which should have been recognized currently during the pre- 
ceding years as they occurred. 

A condensed balance sheet for the company as at December 31, 
1918, is as follows : 

Assets side 

Fixed capital — electric $42,009 

Fixed capital — gas 274,235 

Materials and supplies 8,163 

Current assets 13,997 

Prepayments 2,338 

Deficit 476,143 



Total $816,885 



3Z 



80 State Department Reports 



[Vol. 20] Public Service Commission, Second District 



i- 



Liabilities side 

Capital stock $150,000 

Mortgage bonds 150,000 

Bills and accounts owing to Niagara Falls Elec- 
trical Transmission Company 370,452 

Third mortgage bonds matured and unpaid 51,500 

Miscellaneous unfunded debt 25,136 

Reserve for accrued depreciation 69,797 



Total $816,885 



In the foregoing the balance in the depreciation reserve results 
chiefly from the appropriation of $56,385 in 1917, already 
referred to, which was made in that year to bring the reserve up to 
a figure believed to be the minimum reserve that could reasonably 
be considered adequate. Of course, this is merely a recognition 
of the company's liability for retirement losses not yet realized, 
and does not imply that the company has a fund of this amount 
either specifically set aside or invested, or represented among its 
assets without specific segregation. 

Valuation 

The property of the company has been the subject of examina- 
tion by the Commission, the capital transactions to December 31, 
1916, having been reviewed in a prior case (No. 5892, 14 State 
Dept. Rep. 291). According to the results of this review the 
fixed capital used and useful in the public service in the gas 
department, as later brought down to August 31, 1918, and as 
shown by the books of the company, amounts to $274,153.08, 
but without any deduction for depreciation. 

This property was r* i mined and valued on a basis of recon- 
struction new by the city's expert, Forestall, in 1918, and in his 
report in evidence he states at page 22 that the " fixed capital 
gas " should be reduced by about $8,500 and should not be more 
than say $265,000. On page 23 he states, however, that the 
capital figures are subject to " a certain amount of deprecia- 



Whitehead v. Niagara Falls Gas & Electric L. Co 81 



Public Service Commission, Second District [Vol.20] 



tion," but owing to the showing as to rate of return he did not 
consider it necessary to see by what amount the total should be 
reduced each year on account of depreciation. We therefore have 
no calculation of depreciation. 

The financial history and condition of its physical property, 
the question of the adequacy of its plant, its service and the 
past and present business policy of the respondent as shown by 
the record disclose a somewhat unusual situation which it will be 
necessary to discuss at some length. 

While it is doubtful that the company can fairly substantiate 
a valuation of its physical property in excess of that carried on 
its books and above referred to, it appears that during its entire 
history it has operated unsuccessfully and unprofitably, the 
result being that it now has a bonded and floating debt as shown 
by its annual report for the year 1918 of $597,087.16, and this 
does not include the large liability of $69,797 which it has entered 
upon its books to cover amortization. 

From any point of view these figures indicate that the com- 
pany is in an extremely unsatisfactory financial condition and 
this is more striking when we consider that its prices for gas 
which it now seeks to supersede were relatively high. When we 
examine the operating conditions we find that the gas plant was 
constructed about 1860. It was purchased in 1901 by the present 
company, at which time it had about nine miles of mains. In 
1901 the plant was rebuilt. Between that date and 1913 about 
sixteen additional miles of mains were laid and a new holder 
and bench were installed. Recently a small auxiliary plant was 
constructed, not by the company but by parties interested in it, 
which furnishes about 40,000 cubic feet of gas per day, which it 
sells to the company at one dollar per 1,000. This is about one- 
quarter of the total sales. The company now has twenty-five 
miles of mains and its sales of gas are about 52,000,000 cubic 
feet per year. The population of the city is about 40,000 and 
the growth has been somewhat rapid. It was about 20,000 in 
1901 and about 30,000 in 1910. The number of customers is in 

the neighborhood of 3.000. The population per mile of gas main 
State Deft. Rept. — Vol. 20 6 



62 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

is 1,741 and per meter 16.34. Since the beginning of operations 
the company has at no time made a profit but has accumulated 
the large deficit referred to. It appears that for a few years 
prior to 1917 the company passed through its most promising 
period, as its net earnings for three or four years showed a 
gradual increase. In 1917, however, its gross income from oper- 
ations was nothing and in 1918 its operating deficit was $8,545 
and its total deficit to that time $476,143. The condition of the 
company and its service have been the subject of considerable 
complaint on the part of the population, and in 1918 the prop- 
erty was examined on behalf of the city by Alfred E. Forestall, 
a gas expert, who made an exhaustive written report covering 
both the financial history and condition of the property. This 
report was introduced in evidence and by stipulation received 
with the same effect as though the witnevss had been placed on the 
stand and testified to the facts and opinions appearing in the 
report. The qualifications of the witness as an expert were not 
questioned. The facts and opinions thus presented seem to have 
been prepared and advanced with so much ability, fairness and 
restraint that in the absence of contradictory testimony we have 
decided to accept them, and have relied upon them very largely 
in the disposition of the case. 

Mr. Forestall finds that the existing gas plant is entirely inade- 
quate, that the generating apparatus is obsolete and uneconom- 
ical, that the existing street main system covers only part of the 
territory, which offers a good field for and is entitled to receive 
gas service. He made a survey of the built-up portions of the 
city, and reports the necessity for an immediate extension of 
more than fifty per cent of the total length of existing mains, that 
the present manufacuring plant should be abandoned as soon as 
it can be done conveniently, that with a distribution system fully 
covering the territory and an aggressive business management, the 
sales of gas could be increased to a minimum of 108,600,000 
cubic feet per year immediately, advancing to 150,000,000 
cubic feet a year within a year or two, and that with such a 
plant gas could be sold at less than one dollar and fifty cents, 



Whitehead v. Niagara Falls Gas & Electric L. Co. 83 



Public Service Commission, Second District 



[Vol. 20] 



yielding an 8 per cent return on the investment. Mr. Forestall 
made an inventory and appraisal of the company's physical prop- 
erty in substantial agreement with that arrived at by the Com- 
mission and now carried on the books of the company as its fixed 
capital of the gas department, and he also shows that under 
ordinary circumstances a gas company properly covering the 
territory and aggressively handled should be able to secure sales 
of at least 3,000 cubic feet per capita of the population in a city 
of the character of Niagara Falls. He shows that the population 
per mile of main and per meter in other communities in the 
State of comparable size with Niagara Falls are as follows : 



Amsterdam 

Bingham ton 

Central Hudson Gas and F lectric Company — Ncwburgh 

and Poughkeepaie combined 

Troy 

Niagara Falls 



P -)PULAT10N 



1015 



34,310 
53,068 

60.600 
76,340 
42,257 



per mile 
of main 



1,044 
645 

877 

867 

1,741 



per 
meter 



5.75 
4.58 

4.59 

4.00 

16. ?4 



No main has been laid in Niagara Falls since 1915, so the popu- 
lation per mile of main now is much greater than that in 1915. 
The population per meter is now about seventeen. 

The company does not seriously question Mr. Forestalls criti- 
cisms, and its counsel presented its case and reflected its proposed 
policy as follows : " Now what we intend to do, it is our only 
salvation to get back this money, this two or three hundred 
thousand dollars, our only salvation is to build a new plant and 
supply enough gas so that we can take care of this indebtedness 
and wipe it out. In order to do that we have got to have some 
kind of a showing on the question of earnings * * *. If 
this company is going to be able to finance the new plant, which it 
hopes to do during this year, it has got to be able, I assume, to 
show some kind of a return, something that approximates taking 
care of its operating expenses and a reasonable return on its 
investment." 



84 State Department Reports 



[Vol. 20] Public Service Commission, Second District 



At the hearings which were given hy the Commission the com- 
pany expressed its willingness for the purposes of this case to 
accept a valuation of $275,000 and proposed that the rates should 
be fixed by adopting a base consisting of this sum plus $25,000 
to represent necessary cash capital used in the business. 

While this would not be an unreasonable figure, the fact remains 
that the company reserved its right and indicated its intention 
of claiming at any time it may see fit in the future that its very 
large deficit should be taken into consideration in determining its 
rate base, upon the theory that such deficit represents going value, 
and the only reason why it was willing for the purposes of this 
case to accept the figure above indicated was stated to be that a 
rate base of $300,000 would fully sustain its proposed rate of 
two dollars and twenty-five cents per 1,000 gross, or one dollar 
and ninety-eight cents net. 

Mr. Forestall shows that the proposed rate is quite high in com- 
parison with other similar communities, and this comparison the 
Commission finds to be entirely just. 

As we understand the company's financial policy, it is to use 
the proposed price of two dollars and twenty-five cents gross and 
one dollar and ninety-eight cents net to enable it to make a finan- 
cial showing upon which it can go into the market and embark 
fresh capital, with a view to enlarging its business so as to properly 
cover the city, with the expectation that by thus improving con- 
ditions it can demand a return upon not only its present physical 
value but also upon its large deficit under the claim that it repre- 
sents going value, and also upon such additional moneys as it 
may invest in order to reclaim its lost business. 

But it is not entirely clear to me how such a scheme can be 
worked out. The principles upon which going value are to be 
determined have been fully elucidated by the Court of Appeals 
in the leading case of People ex rel. Kings County Lighting Com- 
pany v. Willcox, 210 N". Y. 479. There would seem to be serious 
question whether any considerable allowance under this head can 
be made in the case at hand. The theory of an allowance for 
going value as laid down in the cases seems to be that such allow- 



Whitehead v. Niagara Falls Gas & Electric L. Co. 85 

Public Service Commission, Second District [Vol.20] 



ance shall in the main be based upon expenditures, if any, which 
the company may have made in building up its business during 
its earlier years. It is quite reasonable that meagreness of return 
during the initial years of an enterprise which has been well con- 
ceived and wisely and energetically managed and brought to a 
condition of success should also in fairness be made up by the 
public. Such failure of early return is a natural incident of the 
business. But in this case the evidence is limited to shortage of 
return which has continued for seventeen years or during the 
entire life of the company until in the aggregate it far exceed. 
the original investment, and there is no evidence of expenditures 
in building up the business except as they may be implied. The 
going value is thus not an incidental part of the valuation but 
composes by far the larger portion. This condition results in a 
requirement of a rate which the company realizes it is useless to 
ask for because it would be far in excess of what the traffic will 
bear. In the meantime important parts of the plant have become 
obsolete and it appears that the legitimate field of the company's 
enterprise has never been followed up and occupied. It may prove 
that even from a practical standpoint, leaving out of consideration 
the legal question involved, it will be found impossible to recover 
the lost ground in the method indicated. It would setem that the 
company may find it necessary to write off a large part of its deficit 
as the only means of arriving at a point where new capital can be 
interested with the end in view of vigorously pushing the business 
and covering the available field. 

In the meantime I think a price should be determined upon 
not so much with reference to rate of return on any given amount 
of capital, as by a consideration of what the traffic will bear, or in 
other words what the public is willing to pay for the service 
rather than go without it altogether. This is not satisfactory as 
a determination of the questions presented and can be looked upon 
only as a temporary adjustment of the rate which will serve while 
the company may take some reasonable period of time to deter- 
mine upon a permanent policy. We realize that this has not been 
possible during the pendency of this complaint, by reason of con- 



86 State Department Repobts 

[Vol. 20] Public Service Commission, Second District 

ditions growing out of the war but which are now being succeeded 
by a more nearly normal period. 

The prices prevailing in other communities in the State of 
comparable size are in general very much lower than those pro- 
posed by the company. A price of one dollar and ninety cents 
per 1,000 cubic feet with a discount of fifteen cents per 1,000 for 
prompt payment will be slightly in excess of the rate which has 
been superseded and will approximately cover costs of operation. 

An order will be entered cancelling the tariff schedule which is 
the subject of complaint and permitting the filing on three days* 
notice of such tariff as has been indicated. 



In the Matter of the Complaint of Patchogue Electbio Light 
Compant against North Shore Electric Light and Power 
CoMPAmr ; Alleging That the Last Named Company is Unlaw- 
fully Constructing Electric Lines 

Case No. 6514 

(Public Service Commission, Second District, June 17, 1919) 

Electric light companies — petition of complainant under section 74 of the 
Public Service Commissions Law granted. 

Complainant contends that the respondent is unlawfully conducting 
its business and maintaining its poles and wires in that part of the town 
of Brookhaven, L. I., lying south of the main line of the Long Island 
railroad, on the ground that it has not secured the requisite consent of 
the local authorities. 

The respondent claims that it has the requisite consent of the local 
authorities to conduct its business in the territory in question by reason 
of a transfer of an alleged consent by another company to a corporation 
later acquired by respondent. Held, that respondent's predecessor was 
without corporate power to make use of the alleged consent within the 
territory in question, at least until the year 1909 when it amended its 
. certificate of incorporation by enlarging its territory; but as the Public 
Service Commissions Law became effective July 1, 1907, which pro- 
hibited the exercise of any local consent of the character in question, 
not previously exercised, without the approval of the Commission, and 



Patchogue El. L. Co. v. North Shore El. L. & P. Co. 87 



Public Service Commission, Second District [Vol. 20] 

the respondent never having procured such approval it is the duty of the 
Commission to protect the complainant by proceeding against the respond- 
ent according to law to require it to cease its unlawful operations in 
complainant's territory. 

Joseph T. Losee and Ainsworth, Carlisle & Sullivan (by John 
N. Carlisle and D. E. Ainsworth), attorneys for complainant. 

Martin S. Decker, Elmer B. Sanford and Willard N. Bayliss, 
for the respondent. 

Hill, Chairman. — Petitioner prays that the Commission direct 
its counsel to proceed in the Supreme Court pursuant to the pro- 
visions of section 74 of the Public Service Commissions Law to 
compel the North Shore Light and Power Company, respondent, 
to remove certain poles and wires which it has erected and is 
maintaining as a part of its electric lighting plant in that por- 
tion of the town of Brookhaven lying south of the main line of 
the Long Island Railroad Company in which petitioner claims 
the right to operate; and that the North Shore Company be 
restrained from extending its lines in that district and supplying 
electricity to the public therein. 

The town of Brookhaven comprises an irregular cross section 
of Long Island extending from Long Island sound on the north 
to the Atlantic ocean on the south and the territory in dispute 
lies within that town. 

The Patchogue Electric Light Company, complainant, which I 
will hereinafter refer to as the Patchogue Company, was incor- 
porated in March, 1888, under the Gas and Electricity Law for 
the purpose, as stated in its articles of incorporation, of furnish- 
ing electric light in the town of Brookhaven, Suffolk county ; and 
in October, 1898, and January, 1909, it secured local consents 
from the municipal authorities of the town granting permission to 
erect poles and string wires on all highways in said town south 
of and including the middle country road 4 and has ever since, 
until the alleged invasion of the respondent, performed the busi- 
ness of electric lighting in that district, having a plant at 



88 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Patchogue. The main line of the Long Island railroad runs 
through the town from east to west, leaving about one-third of 
the town on the south and two-thirds on the north. The middle 
country road runs generally east and west at some little distance 
north of the Long Island railroad. 

The respondent company was incorporated March 10, 1909, 
under article 6 of the Transportation Corporations Law, for the 
purpose- of manufacturing and distributing electricity, and, in 
compliance with the requirements of the statute, it describes the 
territory in which it intends to conduct its operations as the 
" territory included in the towns of Brookhaven and Smithtown." 

The North Shore Company acquired on March 11, 1909, the 
requisite consent of the local town authorities to operate upon the 
streets and highways in said town of Brookhaven lying north of 
the main line of the Long Island Railroad Company, and operates 
and has operated therein. 

We thus find that both companies have acquired from the State 
the requisite corporate powers or franchises to operate, on con- 
dition, as prescribed by statute, of securing the consent of the 
local authorities, in all parts of the town of Brookhaven, and that 
the Patchogue Company has also acquired the requisite consent 
of the local authorities to occupy the streets and highways in that 
part of said town south of and including the middle country road, 
and is operating therein, and that the North Shore Company has 
secured such local consent for the portion of the town lying north 
of the main line of the Long Island Railroad Company and has 
the right to operate therein. 

No question is raised as to the validity of either of said con- 
sents or of the rights of the respective companies to operate there- 
under within the territories described therein. 

The dispute in this case arises over complainant's contention 
that respondent company has not secured the requisite consent 
of the local authorities to permit it to lawfully conduct its busi- 
ness and erect its poles and wires in that part of the town of 
Brookhaven lying south of the main line of the Long Island Rail- 
road Company, and in which the objectionable construction has 
taken place. 



Patchoguk El. L. Co. r. North Shore El. L. & P. Co. 89 

Public Service Commission, Second District [Vol. 20] 

The respondent company answers this contention by claiming 
that it has acquired and, now possesses the requisite consent of 
local authorities in that part of the town which is the seat of the 
dispute in the form of a certain consent purporting to have been 
granted June 30, 1904, by the local authorities of the town of 
Brookhaven to a lighting corporation known as the Brookhaven 
Electric Light Company, which gave permission to that company 
to erect its poles and string its wires upon all the highways, 
avenues and streets of the town of Brookhaven for the purposes 
mentioned in its certificate of incorporation upon certain terms 
and conditions. One of these conditions was that the company 
should pay to the supervisor of the town from and after January 
1, 1912, 1% per cent of the gross receipts of the company. 
Another condition was that before beginning work it should exe- 
cute and deliver a bond to the town for the sum of $1,000 to 
indemnify the town against suits for damages caused by the 
prosecution of its work. Another condition was that failure to 
commence work under the consent on or before two years from 
its date would render the same null and void; and the only 
remaining condition which we need refer to was that failure to 
comply with the terms of the resolution or consent should render 
the same void. 

As the final determination of the dispute under consideration 
will probably turn upon the rights and privileges, if any, which 
the respondent company possesses by virtue of this consent, it 
will be necessary to trace its history from its inception. 

The Brookhaven Electric Light Company never issued any 
capital stock or operated either financially or by the erection of a 
plant for the manufacture or sale of light. It was incorporated 
in October, 1903, under the Transportation Corporations Law for 
the purpose of doing electric lighting in the town of Brookhaven. 
It secured the consent referred to on January 30, 1904. On 
September 15, 1905, the local authorities passed a resolution 
" extending the franchise for a term of five years from the date 
of expiration, on same terms and conditions as before." The 
franchise, however, by its terms, was to remain in force for a 



90 State Department Reports 



[VoL 20] Public Service Commission, Second District 

period of fifty years, and it is probable that the intention was to 
extend the time limited in the consent for the beginning of work 
within two years to an additional period of five years. 

At this time there was in existence another electric lighting 
corporation, known as the Port Jefferson Electric Light Com- 
pany. This company was incorporated under the Transportation 
Corporations Law, for the purpose of doing electric lighting, 
and, as stated in its certificate of incorporation, the objects of its 
creation were manufacturing and using electricity for producing 
light, heat and power for lighting streets, avenues, public parks 
and places and public and private buildings at " Port Jefferson, 
Suffolk Co., N. Y.," and the certificate further stated that the 
names of the town and county in which the operations were to be 
carried on were " Port Jefferson, Suffolk Co., N. Y." This com- 
pany was incorporated in 1905. Port Jefferson then was and still 
is an unincorporated village, lying in the town of Brookhaven. 
The certificate of incorporation was very inartificially drawn, 
but it would seem that inasmuch as the statute chapter 566, Laws 
of 1896, specified cities, villages and towns as the units of terri- 
tory in which operations could be carried on, the natural con- 
struction of the language contained in the certificate which would 
carry into effect the evident intention of the parties would bo 
that the operations of the company were to be carried on in the 
unincorporated village of Port Jefferson. The consent of the 
local authorities was likewise limited to " the streets of the village 
of Port Jefferson." 

Respondent's counsel suggests that by reason of the failure of 
the certificate to state the name of one or more incorporated vil- 
lages, counties or towns as those wherein the business was to be 
conducted we should so interpret the language which was used as 
to make it mean either the entire county or the entire town. But 
where the intention is as clear as it is in this instance there would 
seem to be no room for interpretation. A fairer construction would 
seem to be to assume that it could take no more than it clearlv 
intended to take, namely, the unincorporated village of Port Jef- 
ferson, the boundaries of which while not legally defined could 



Patchogub El. L. Co. v. North Shore El. L. & P. Co. 91 

Public Service Commission, Second District [Vol. 20] 

be determined in fact. In 1909 this certificate of incorporation 
was altered and amended pursuant to section 18 of the Stock Cor- 
poration Law by extending the territory in which the business 
was to be conducted so as to include the entire town of Brook- 
haven. Respondent's counsel in their brief treat this certificate as 
having been filed pursuant to section 7, General Corporation Law, 
which provides a method of correcting defects or omissions in the 
original certificate of incorporation, and claim that such a certifi- 
cate operates ex post facto as of the date of the original certifi- 
cate. The objects of the two provisions are entirely distinct. A 
certificate under section 7 secures no new rights and can add 
nothing to the corporate powers or privileges. Its purpose is 
merely to correct defects or omissions so as to preserve the corpo- 
rate entity ab initio. A certificate under section 18 of the Stock 
Corporation Law serves an entirely different purpose and has the 
effect of enlarging and extending the corporate powers ; but clearly 
such enlargement takes place only from the filing of the certificate. 
Therefore the filing of the amended certificate had no effect prior 
to 1909 when it was filed. 

It thus appears that when on September 5, 1905, the Port 
Jefferson Company took what it claims was an assignment from 
the Brookhaven Electric Light Company of the consent which that 
company had received from the authorities of the town of Brook- 
haven, its corporate power to conduct business and to occupy the 
public streets and highways was limited to the village of Port 
Jefferson. That power could not be extended by the village 
authorities or by means of any consent given by them. It could 
be extended only by a grant of power from the State by means 
of an alteration of the certificate of incorporation so as to enlarge 
the territory described therein. The power to operate and to 
occupy the public highways is drawn from the State and not from 
the local authorities. The latter only consent to the exercise of 
the power given by the State because the Legislature has made 
the local consent a condition of the exercise of the privilege or 
franchise granted by it. To illustrate, it would not be claimed 
that the Port Jefferson Company, incorporated to carry on its 



92 State Department Reports 



[Vol. 20] Public Service Commission, Second District 



operations in the "village of Port Jefferson," could lawfully 
extend its operations to the streets of the city of New York by 
virtue of a consent of the local authorities which it might succeed 
in obtaining. If it should also lawfully acquire from the State 
the power and privileges of operating there, then the local consent 
would become operative but not otherwise. We are dealing not 
with natural or common-law rights and equities but with rights 
which are created wholly by statute and which draw all of their 
vitality therefrom. Thus section 10 of the General Corporation 
Law provides that no corporation shall possess or exercise any cor- 
porate powers not given by law or not necessary to the exercise of 
the powers so given. It seems clear that the Port Jefferson Com- 
pany was without corporate power to make use of the Brookhaven 
consent outside of the village of Port Jefferson, at least until in 
1909 it amended its certificate of incorporation by enlarging its 
territory. If this conclusion is correct it follows that the consent 
or franchise in question could not have been legally exercised out- 
side of Port Jefferson until 1909, and no claim is made that it 
was ever exercised within the boundaries of Port Jefferson. 

Before 1909 arrived, however, and on July 1, 1907, the Public 
Service Commissions Law became effective, which prohibited the 
exercise of any local consent of the character of that with which 
we are dealing not previously exercised without the approval of 
the Commission. The respondent admits that the so-called Brook- 
haven consent has never been approved by the Commission, but 
claims that during the period in which it was held by the Port 
Jefferson Company prior to July 1, 1907, it was exercised by that 
company, thus relieving it and its successors in interest from the 
requirement of the approval. of the Commission. Much evidence 
was given bearing upon the question of fact thus raised. If I am 
correct in the view that at no time prior to July 1, 1907, could 
the Port Jefferson Company have made or enjoyed any lawful 
use of the consent by reason of the limitation of its corporate 
powers to the village of Port Jefferson, it is immaterial whether 
that company did or did not " exercise " it. But assuming that 
even an unlawful exercise in fact during the period claimed would 



Patchooue El. L. ,Co. v. North Shore El. L. & P. Co. 03 

Public Service Commission, Second District [Vol. 20] 

have availed the respondent, I think that upon the evidence pre- 
sented we must find as matter of fact the consent was not exer- 
cised. The only testimony supporting the respondent's contention 
in this regard is that certain pole lines were constructed in the 
vicinity of Setauket Lake, Stony Brook and Oldfield off the 
" Main road," that being the road upon which the company did 
possess a consent, the inference being that because no other than 
the Brookhaven consent would cover such construction it must 
have been done thereunder; but the undisputed evidence in the 
form of written documents leads irresistibly to the conclusion that 
the Port Jefferson Company never relied upon that consent as the 
basis for any construction whatever and never intended to and 
never did do any construction under it. It appears that it secured 
other consents from the town authorities which were entirely use- 
less provided the Brookhaven consent was valid ; that it has never 
given the bond required, and never made or tendered any pay- 
ments required by its terms until after this litigation was begun. 
It appears also that long after 1907 it procured from the town 
authorities what purports to be a ratification " of all the acts of 
the Port Jefferson Electric Light Company in erecting and con- 
structing its poles and stringing its wires in the northern section 
of the town of Brookhaven, and to make definite and certain what 
are its rights, privileges and immunities." This resolution recites 
construction under the consent of April 15, 1895, covering " the 
streets of the village of Port Jefferson ;" the consent of September 
13, 1904, covering the main road between Port Jefferson and 
Smithtown, and the consent of April, 1909, between Port Jeffer- 
son and Mt. Sinai and other points, ratifies the acts of the com- 
pany as above recited, and, in a final clause, further resolves that 
the said Port Jefferson Company may have permission to erect, 
construct and maintain its poles and spread its wires, for the pur- 
pose of furnishing electricity, to all the highways, roads and 
streets in the northern port of the town of Brookhaven north of 
the middle country road, but no recital or mention is made of 
the so-called Brookhaven consent. And finally, in 1912, in a liti- 
gation between the Port Jefferson Company and the North Shore 



94 State Department Reports 



[VoL 20] Public Service Commission, Second District 

Electric Light and Power Company, wherein the rights of the 
Port Jefferson Company to construct in certain highways in the 
town of Brookhaven were at issue, the secretary and managing 
agent of that company in defending such right to construct justi- 
fied entirely under consents other than the Brookhaven consent, 
and while alleging the possession of the so-called Brookhaven 
consent did not claim that any construction or operation had been 
done under it ; while in the brief filed by the company's counsel 
on the hearing of the appeal in that litigation reliance was placed 
exclusively upon the ratifying resolution and the consents recited 
therein and not at all upon the Brookhaven consent. Surely if 
the company had exercised or claimed to have exercised the Brook- 
haven consent, which, if available, covered the entire town, it 
would have claimed so at that time. 

Much attention has been given upon the trial and in the briefs 
to the question whether or not any legally effective transfer of 
the so-called Brookhaven consent was ever accomplished as between 
the Brookhaven Company and the Port Jefferson Company or its 
successor, the North Shore Company. In my view of the case it is 
unnecessary to determine whether or not the informal assignment 
made by two directors in connection with the so-called ratification 
agreement purporting to be executed under the seal of the com- 
pany during the pendency of the present petition had the effect of 
vesting in the North Shore Company such rights as were origi- 
nally conferred upon the Port Jefferson Company by the Brook- 
haven consent, or to what extent any such rights have survived. 

The Commission not only has the power but it is its duty to 
protect the petitioner by proceeding against the respondent to 
require it to cease its unlawful operations in petitioner's territory 
south of the main line of the Long Island Railroad Company. 
People ex rel. Onconta L. & P. Co. v. Public Service Commission, 
180 App. Div. 32; Public Service Com, v. Rogers Co., 184 
id. 705. 

All concur. 



Residents of Washington Mills v. U. S. R. R. Adm. 95 



Public Service Commission, Second District [Vol. 20] 



In the Matter of the Complaint of the Residents of Washing- 
ton Mills, Chadwicks, Willowvale, Sauquoit, Clayville, 
Cassvillb and Waterville, Oneida County, against United 
States Railroad Administration — Delaware, Lacka- 
wanna and Western Railroad; Asking for Better Passen- 
ger Train Service Between Said Points and the City of Utica, 
Particularly a Late Train at Night from Utica 

Case 6738 

(Public Service Commission, Second District, June 24, 1919) 

Passenger train service — convenience of public — discontinued train restored. 

On August 18, 1918, train No. 812, which had been operated for 
many years, was discontinued by the Railroad Administration on account 
of insufficient earnings and the moderate degree of public convenience 
served. Formerly it left Utica at 10 o'clock P. M. and connected at 
Binghamton with train for New York. The records show that from 
February 25, 1918, to March 3, 1918, both inclusive, 1,005 passengers 
were carried at a revenue of $806.11 and from August 0, 1918, to 
August 17, 1918, both inclusive, 949 passengers were carried at a revenue 
of $995.81. The Pullman records show that from January 1, 1917, to 
July 8, 1918, both inclusive, 5,297 berths were occupied from all points 
to all destinations. The cost of operation as figured by the company 
does not agree with the figures of the expert employed by the Commis- 
sion who fixes the cost of operating the train at about $190 per day. 
Held, that the mere fact that the train may be run at a loss is not 
necessarily a reason why it should not be again placed upon the road, 
and that for the convenience of the public the train should be restored, 
and that it should leave Utica not later than 10:30 P. M. and connect at 
Binghamton with the train leaving there for New York at 1:57 a. m. 

John Evans, for the complainants. 

John Gh Duffy, secretary Utica Chamber of Commerce. 
D. F. Conroy, secretary Norwich Chamber of Commerce. 
Wm. B. Jones and Alfred W. Cockrell, for Utica Daily Press. 

Stanley Ricker, W. E. Nelson, and C. G. Alberding, citizens 
interested. 



•• • - 
• •• r 



96 State Department Reports 



[Vol. 20] Public Service Commission, Second District 



R. S. Eaton, for Norwich Pharmaceutical Company. 

C. V. Byrne, attorney for United States Railroad Administra- 
tion and Delaware, Lackawanna and Western Railroad Company. 

George A. Cullen, as passenger traffic manager, and Frank 
Cizek, as superintendent of railroad. 

Barhite, Commissioner. — This is an application by a large 
number of residents of the towns situated south of Utica on the 
Binghamton and Utica branch of the Delaware, Lackawanna and 
Western Railroad, asking for better passenger train service on 
that branch. The complainants are divided practically into two 
classes: Those who live at Waterville and stations intermediate 
between that point and Utica and who desire a train leaving Utica 
late in the evening for their homes, and those who desire a late 
evening train making connections at Binghamton with train No. 
12 at 1 :57 a. m., on the main line for New York. The complaint 
finally narrows down to the question as to whether train No. 812, 
which had been operated on the road for many years but which 
had been discontinued on August 18, 1918, should be restored. 
This train had left Utica at 10 p. m., and made connections at 
Binghamton with the New York train. This train had been dis- 
continued, as claimed by the Railroad Administration, on account 
of insufficient earnings and the very moderate degree of public 
convenience served by it. 

The records of the number of passengers carried by the train 
while in operation, unfortunately, are meager and give the busi- 
ness transacted only for short periods of time : From and includ- 
ing June 27, 1917, to and including July 3, 1917, a period of 
seven days, 871 passengers were carried, giving a revenue — at 
present rates — of three cents per mile, or $754.23; from and 
including January 5, 1918, to and including January 14, 1918, a 
period of nine days, 1,040 passengers were carried, with a rev- 
enue — at present rates — of $661.87; from and including Feb- 
ruary 25, 1918, to and including March 3, 1918, a period of 
seven days, 1,005 passengers were carried, giving a revenue of 
$806.11; from and including August 6, 1918, to and including 



Residents of Washington Mills v. U. S. R. R. Adm. 97 



Public Service Commission, Second District [Vol. 20] 



August 17, 1918, a period of twelve days, 949 passengers were 
carried, indicating a revenue of $935.81. The records of Pullman 
car service extended over a longer period of time and show that 
from January 1, 1917, to July 8, 1918, both inclusive, 5,237 
berths were occupied from all points to all destinations. The 
revenue is not reported. The company is unable to furnish the 
amount of revenue derived from express matter carried on this 
train. 

No attempt was made to show the amount of revenue 
derived from freight drawn over the branch. The company has, 
however, submitted a detailed statement of the various items 
which it is claimed must be considered in determining the cost 
of operating this train should it be put back on the road. In 
this estimate is included the cost of return train from Bing- 
hamton to Utica. Among the items is 60 per cent of operating 
cost for maintenance of roadway and equipment, $2,620.42 ; ren- 
tal value of locomotives and coaches, $1,097 ; another item is 
overtime of operators, $624. The total cost of the trains as esti- 
mated for a thirty-day month is $8,084.79. The figures presented 
as to the cost of operation have been submitted to a thoroughly 
competent expert employed by the Commission. His observations, 
which follow, have the indorsement of the Commission. 

" The item covering the overtime of operators is not clear. 
Day and night operators are now provided at the following 
points: Utica, Richfield Junction, Waterville, Sherburne, Haynes, 
Oxford, Greene and Chenango Forks. This division is equipped 
with automatic signals throughout, and it would seem that the 
operators at the stations above indicated would be sufficient for 
night time operation of this railroad. I therefore do not see 
the necessity of including this charge. The Union depot charge 
is an arbitrary charge and is undoubtedly correct 

" The item covering the cost of maintenance of roadway and 
equipment is based as indicated in the evidence on the ratio 
existing between the operating costs and the expenses of mainte- 
nance of roadway and equipment. The railroad has used 60 as 

the percentage of the operating cost which the expenses for 
State Deft. Reft.— Vol. 20 7 



• » * 



98 State Department Reports 

[Vol. 20] 1 uolic Service Commission, Second District 

maintenance of way and equipment are. I have checked up the 
figures of this railroad for the year ended December 31, 1918, 
and find that the percentage is 70.02 for the whole railroad. 
I assume that the company either used the figures for an earlier 
year or else made allowance for a difference in the standards 
of maintenance employed on the* main line and branches. Never- 
theless, I believe that to adopt this method of computing the 
cost of these two maintenance items- is erroneous, for the reason 
that it is decidedly improbable that the running of these two 
extra trains would involve this increase in the item. While 
this may be a proper percentage, it does not necessarily follow 
that there will be any additional expenditure on account of the 
operation of the trains. There will be a slight additional amount 
for the maintenance of the equipment, but I do not believe that 
relatively it will be as much as is shown. This is an intangible 
matter and I do not know any accurate way in which a con- 
clusion may be reached, but I am firmly convinced that it is 
wrong to adopt such an item. 

" Similarly in the case of the rental values assigned. It may 
be true that these are the rental values assigned by the Federal 
Administration, but such values include a return on the money 
invested in the equipment, depreciation, repairs, and undoubt- 
edly an element of profit. Certainly these should not all be 
included for the reason that thev have been included in some of 
the other items. The item of profit should certainly not be con- 
sidered. I believe that it is not proper to include any of these 
values. This equipment will be engaged in the business of the 
railroad which ostensibly is being operated to serve the public and 
also to make a certain profit for the holders of the securities 
of the corporation. If this is so, then all of the elements which 
go into the cost of establishing the business and increasing the 
facilities should be considered as capital expenditures, the return 
on which should come from the difference between the income 
and the expenses. 

" I do not see how the rental value can be considered as an 
expense, and therefore if it is not an expense, it is not properly 



« * , * * 
* . « * «• 



Residents of Washington Mills v. TT. S. R. R. Adm. 99 

, , , — - 

Public Service Commission, Second District [Vol. 20] 

chargeable as part of the cost of operating the train. If it is 
proper to include such rentals why is not something included for 
the rental value of the rails, right-of-way, station buildings, etc. ? 
It seems to me to be just as logical to include these as to include 
the equipment. 

" Therefore, in arriving at the probable cost of operating this 
train, I think it fair to include only the out of pocket expense, 
which is $4,367.37, less the overtime of the operators, viz., 
$624, or $3,743.37, or about sixty-six cents per mile. It must 
be borne in mind that nothing is included to represent the 
necessary repairs to equipment and track, which will have to 
be made. I do not think it unreasonable to assign to this about 
twenty-five cents per mile, making the total cost approximately 
$1. If such a figure is used, it will be seen that the cost of 
operation will be about $190 per day. This will probably result 
in a slight loss, but nothing like the amount which is indicated 
by the figures presented by the railroad." 

It must not be forgotten that the fact that this train may be 
run at a loss is not necessarily a reason why it should not be 
again placed upon the road. The principle is old and well 
established that a determination whether a public utility com- 
pany shall furnish a certain service does not rest upon the ques- 
tion whether that particular service will yield a profit to the 
company, but upon the necessities and convenience of the public 
and upon the effect which the act of furnishing the particular 
service will have upon the total earnings of the company. The 
principle is very clearly laid down in St. Louis & San Francisco 
Ry. Co. v. Gill, 156 U. S. 649, 665. In that case the court had 
under consideration the effect of a statute which prescribed a 
maximum rate of fare. The company had been sued for a 
penalty provided for a violation of the statute. The company 
defended upon the ground that the portion of the road over 
which the plaintiff had been carried was highly expensive to 
construct and maintain and that the cost of maintenance and 
transporting passengers over it exceeded the minimum rate fixed 
by law. The Supreme Court held that the correct test was as to 






100 State Dbpabtmbnt Reports 



[Vol.20] Public Service Commission, Second District 



the effect of the law on " the defendant's entire line, and not 
upon that part which was formerly a part of one of the con- 
solidated roads; that the company cannot claim the right to earn 
a net profit from every mile, section or other part into which 
the road might be divided, nor attack as unjust a regulation 
which fixed a rate at which some such part would be unremune- 
rative * * * and finally, that to the extent that the question 
of injustice is to be determined by the effects of the act upon 
the earnings of the company, the earnings of the entire line must 
be estimated as against all its legitimate expenses." 

It is clearly the opinion of the Commission that the train 
known as No. 812 previous to the time of the war should be 
restored to service and should leave Utica at as late an hour as 
may permit it to connect with train No. 12 on the main line 
bound for New York. 

Irvine and Fennell, Commissioners, concur ; Hill and Kellogg, 
Commissioners, concur on the ground that this train having been 
operated for a long period of years prior to its recent removal by 
order of the United States Railroad Administration, the burden 
of proof was upon the respondents to justify its discontinuance 
and that they failed to sustain such burden. 

In accordance with the foregoing opinion, the Commission on 
the same day made the following order : 

By the Commission. — A large number of residents of villages 
on the line of the Delaware, Lackawanna and Western Railroad 
Company having made application to this Commission for the 
purpose of securing better transportation facilities over the line 
of the Delaware, Lackawanna and Western Railroad Company 
between the cities of Utica and Binghamton, and, in particular, 
a late evening train from the city of Utica southerly; and the 
application having come on to be heard before Commissioner 
Barhite in the city of Utica, N. Y., at which time John Evans, 
representing the complainants, John G. Duffy, the Utica Chamber 
j>f Commerce, D. F. Conroy, the Norwich Chamber of Com- 



■ t h % * 
1 ». % * • 



Petition of Empire State R. R. Corporation 101 



Public Service Commission, Second District [Vol.20] 



merce, R. S. Eaton, Norwich Pharmaceutical Company, William 
B. Jones and Alfred W. Cockrell, the Utica Daily Press, Stanley 
Ricker, W. E. Nelson and C. G. Alberding, appeared as citizens 
interested, C. V. Byrne, as attorney for the United States Rail- 
road Administration and the Delaware, Lackawanna and Western 
Railroad, George A. Cullen, as passenger traffic manager, and 
Frank Cizek, as superintendent of said railroad ; and it appear- 
ing from the evidence that the addition of another passenger 
train to be run over the tracks of the Delaware, Lackawanna and 
Western Railroad Company between the cities of Utica and 
Binghamton is reasonably necessary to accommodate and trans- 
port the passenger traffic on said road ; 

Ordered, That the United States Railroad Administration 
and the Delaware, Lackawanna and Western Railroad Company 
be and they are hereby directed to daily run over the tracks of 
said company between the cities of Utica and Binghamton a 
passenger train which shall leave the city of Utica in the evening, 
not earlier than 10:30 o'clock, and shall connect with train 
known as No. 12 on the main line of said railroad, and leaving 
said city of Binghamton for New York city at 1 :57 o'clock a. m. 
Said train shall be put into service on or before the 1st day of 
July, 1919, on three days' notice to this Commission and to the 
public, as required by law. 



In the Matter of the Petition (or Complaint) of Empire State 
Rai:lroad Corporation, under Subdivision 1, Section 49, 
Public Service Commissions Law, for Consent to Increase 
Certain Passenger Fares in and Between Syracuse and Oswego 
and Intervening Points 

Case No. 6787 

(Public Service Commission, Second District, July 1, 1919) 

Internrban fare increases. 

On February 20, 1919, the corporation filed a petition for permission 
to install a tariff superseding those already filed. The question hetfe; 



102 State Department Reports 



» * » * * 
» • * •* 



[VoL 20] Public Service Commission, Second District 

considered is the rate of interurban fare on the Oswego-Syracuse divi- 
sion, which is based on a rate of two and seventy-seven one-hundredths 
cents per mile adjusted to rates of five cents and multiples of five, giv- 
ing a rate of Teturn of 5.19 per cent; if depreciation is deducted a 
return of 5.63 per cent and a return on property costs plus working 
capital less depreciation of 5.28 per cent. Held, that the rates are not 
excessive and the tariff filed is approved with the exception that the 
corporation shall sell a family coupon book of one hundred coupons each, 
representing a normal five cent fare at a price of three dollars and 
seventy-five cents, good for use within three months of date of sale. 

Nottingham, Nottingham & Edgcomb (by William Notting- 
ham), as attorney for applicant. 

Ibvine, Commissioner. — The rates of the Empire State Rail- 
road Corporation have been, in several cases, for a long time 
tinder consideration by the Commission. The corporation is the 
result of a reorganization attendant upon the dissolution of the 
former Empire United Railways. See orders of this commission 
in Cases 6209 and 6210 made respectively October 24, 1917 and 
October 30, 1917. The corporation owns and operates what was 
originally the Auburn and Northern Railroad between the city 
of Auburn and the village of Port Byron, local systems in the 
cities of Oswego and Fulton and an interurban line between 
Oswego and the city of Syracuse. This case concerns only rates 
on the last mentioned line. A tariff making certain increases in 
rates was filed to become effective January 6, 1918. Complaint 
was made against these increases by the mayor and common 
council of the city of Oswego. While that case was pending a new 
tariff was filed to become effective August 1, 1918. The operation 
of that tariff was suspended but the suspension order was revoked 
when it became evident that the city intended to make no further 
active resistance and when the Commission was informed that 
wage schedules were under consideration by the War Labor Board, 
the arbitration by which might seriously affect the condition of 
the corporation. Aside from the inherent reasonableness of the 
: general schedule, these rates presented objectionable features 



Petition of Empire State R. R. Corporation 103 

Public Service Commission, Second District [Vol. 20] 

because of local discriminations largely brought about by differ- 
ences between ticket rates and cash fares paid on the cars without 
rebate. The uncertainties as to labor costs and certain other 
features prevented an immediate decision and February 20, 1919, 
the corporation filed a petition for permission to install a still 
further tariff superseding those already in question. That is the 
present case and the only matter that need be considered is in 
connection with the interurban fares on the Oswego-Syracuse 
division. This tariff is based on a rate of two and seventy-seven 
one-hundredths cents a mile but is adjusted to rates of five cents 
and multiples of five. It makes no increases for the carriage of 
passengers within the city of Fulton, the city of Oswego, the city 
of Syracuse, to points between Syracuse and Baldwinsville, exclud- 
ing Baldwinsville, or to points between Minetto and Oswego, 
although the one way rate from Minetto to Oswego is increased 
one cent. The new tariff increases commutation rates from one 
and one-quarter to one and one-half cents per mile. This is sub- 
stantially the rate on other roads in that part of the State. A 
coupon family book is withdrawn from sale. There are also 
special tickets used, chiefly by workmen, good for twelve round 
trips between Syracuse and Holcomb and between Oswego and 
Minetto. These rates are not disturbed. It is proposed also to 
charge passengers boarding trains at points where are ticket offices, 
at times when the offices are open, an additional ten cents where 
the regular fare is over fifteen cents, but to give a rebate check 
for the full amount of the excess fare. At the hearing on this 
application held in Syracuse, May ninth, there was no opposition 
presented to the present application of the company. The pro- 
posed tariff removes the discriminations which appeared in the 
previous tariffs and no ground can be found to question the pro- 
priety of its general structure. The sole question is as to the 
reasonableness of the rate base proposed. 

The Commission, through the reorganization proceedings, is 
quite familiar with the property of the company and its value 
taken as a whole. Its apportionment among the different lines 



104 State Depaetment Reports 

[Vol. 20] Public Service Commission, Second District 

presents difficulties. The actual cost of the property as ascertained 
by the Commission in previous proceedings with adjustments due 
to additions and retirements since the reorganization is shown in 
the evidence as $4,972,850.95. This includes actual expenditures 
for interest during construction, engineering, etc., but it does not 
include such items as promoters' services, cost of procuring fran- 
chises and development costs (usually mistermed " going value "). 
In the reorganization proceedings there was an issue of $1,000,000 
allowed in addition to the net tangible assets of the company but 
with the stipulation that such allowance should not be construed 
as a determination that it should be deemed a permanent intangible 
fixed capital asset. Undoubtedly some proportion of this should 
be considered but as it is impossible on evidence before us to 
determine how much it is entirely excluded from calculations. 
In placing a value on the interurban line there should be deducted 
the cost of the Auburn and Northern quite definitely ascertained 
in previous proceedings at $404,389.61 and the estimated cost of 
the Oswego and Fulton city divisions made on behalf of the 
company by Mr. W. E. Putnam in 1918, the propriety of which 
the Commission finds no reason to question. In the value of the 
Oswego and Fulton .cities property there is included a portion of 
the value of the lines in the two cities used by the interurban cars 
apportioned according to the percentage of use between the city 
cars and the interurban cars. The cost of the Oswego and Fulton 
city divisions as so ascertained is $487,488. This leaves as the 
cost of the interurban line $4,080,973.34. We will adopt this 
figure as the rate base, repeating, however, that if the proper 
amount could be ascertained there should properly be added 
something for actual intangibles of the character above referred to. 
In constructing an estimated income account under the proposed 
rates revenues have been assumed without any allowance for 
decreased travel due to increased rates. It is probable that there 
will be less decrease than usually occurs in such cases because, 
while there are two steam railroads operating, between Syracuse 
and Oswego and there is theoretical competition between most 
intermediate points, the passenger service has been so greatly 



Petition of Empieb State R R. Corporation 105 



Public Service Commission, Second District [Vol. 20] 



^_ 



curtailed on both roads and the service of the applicant is so 
frequent that the steam competition, while not negligible entirely, 
is so small that unless the steam service is greatly improved, it 
will not seriously affect the revenues of the applicant. 

The applicant charges as depreciation 2 per cent of the actual 
field costs of way and structures and 3 per cent on equipment. 
Neither of these items is excessive. 

The estimate for taxes for 1919 is $40,559. The taxes for 1918 
were $28,581. This large increase is not satisfactorily accounted 
for and in constructing the income account the taxes are estimated 
on the 1918 basis. Operating expenses have been largely increased 
in part by the cost of material but chiefly by the increases in wages 
according to the award of the War Labor Board. For example, 
platform men were allowed forty-five cents per hour and a ten- 
hour day, irrespective of the amount of platform time and there 
was testimony to the effect that on this basis, with overtime, the 
average platform expense is nearly fifty cents an hour for each 
man. The Commission has received information to the effect that 
very recently the wage scale for platform men has been increased 
to forty-seven cents an hour to equalize the pay with that received 
on neighboring interurban lines. This will make a further 
increase in operating expenses, but we base our estimate on the 
evidence offered at the hearing. Two small items from the com- 
pany's exhibits are questionable but they are so small that they 
would not affect the result. Subject to these explanations, we 
reach the following estimate as an income account for the year 
1919: 

Estimated operating revenues assuming present tariff 
to be in force throughout year, as shown in company's 
Exhibit No. 2 $662,307 

Estimated increase under proposed tariff as shown in 

company's Exhibit No. 3 42,526 

Total estimated operating revenue $704,833 



106 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Estimated proper depreciation allowance as shown in 

company's Exhibit No. 5 $69,393 

Estimated other operating expenses and rent deductions 
(developed by taking figures for operating expenses 
as shown in company's Exhibit No. 2 and subtracting 
therefrom the amounts included therein for deprecia- 
tion as stated in company's exhibit No. 5) 397,993 

Tax bills received during 1918 28,581 



Total estimated revenue deductions $495,967 



Estimated operating income $208,860 

Estimated other non-operating income 3,046 



Estimated amount of return on investment $211,912 



On the almost bare bones value then of $4,080,973, this gives 
a rate of return of 5.19 per cent. If depreciation is deducted, a 
return of 5.63 per cent and on property costs as above, plus 
working capital, less depreciation 5.28 per cent. None of these 
rates is excessive and none will prove sufficient to be especially 
attractive to new capital as it may be needed. A careful inquiry 
has been made into the increases in operating costs in comparison 
with increases shown by other companies. The average increase 
of 1918 over 1917 of six comparable companies is 19.67 per cent, 
while that of this company was 6.38 per cent, although on the 
figures already given we have estimated an increase .for 1919 
over 1918 of 16.84 per cent. 

While comparisons are not of much value where operating 
conditions are different, it is of some interest to note the prevailing 
rates of fare per mile on other interurban roads operated into 
Syracuse. They are as follows: New York State Railways, 
Oneida line, two and nine-tenths cents; Rochester and Syracuse 
Railroad Company, three cents; Syracuse and Suburban, cash 
three cents, ticket two and fifty-five one-hundredths cents; Auburn 
and Syracuse Electric Railroad, cash two and eighty-four one- 



Petition of Nbw Yobk & Stamford Ratlway Co. 107 

•■_ m - . -- . 

Public Service Commission, Second District [Vol. 20] 

hundredths cents, ticket two and sixty-six one-hundredths cents. 
In the case of the Auburn and Syracuse outside of the Auburn 
city district, that is, between Soule cethetery and Syracuse city 
line, the cash fare is three cents per mile and the ticket fare two 
and seventy-seven one-hundredths cents* 

The so-called family coupon book of 100 coupons at four dollars 
and fifty cents was first provided in a tariff filed to become effective 
August 1, 1918. It was designed primarily, and perhaps entirely, 
to permit frequent passengers using stations at which no tickets 
were sold approximately the ticket rate. The proposed tariff 
eliminates this book. My colleagues are of the opinion that some 
such reduced rate should be continued. Such books are not sold 
by other railroads entering Syracuse, but, on the other hand, these 
other railroads sell mileage books which are not included in the 
proposed tariff. In addition to the twelve round trip tickets 
above referred to the company offers a fifty-trip ticket, good for 
use by the purchaser within thirty days but only between specified 
points. The Commission is of the opinion that the family coupon 
book of 100 coupons, each representing a normal five-cent fare, 
should be sold at a price of three dollars and seventy-five cents, 
and good for use within three months of the date of sala In other 
respects the proposed tariff is approved. 

All concur. 



In the Matter of the Petition of New York and Stamford Raii^ 
way CoMPAirr under Section 53, Public Service Commissions 
Law, for Approval of the Exercise of Rights under Amendments 
to Certain Franchises of Said Company from Municipalities; 
also as to Filing Passenger Tariff on Short Notice 

Case No. 6886 

(Public Service Commission, Second District, July 1, 1919) 

Street railways — new zoning system and increase of fares approved. 

The evidence shows that for the year ending December 31, 1918, the 
total cost to the company for carrying each passenger was 6.11 cants 



108 State Department Reports 



[Vol.20] Public Service Commission, Second District 

and the total receipts per passenger 5.05. For the three months ending 
March 31, 1919, the net loss per passenger had increased to 2.4 cents. 
The company proposes a new fare zoning plan in an attempt to meet 
costs. The towns and villages served by the system have granted amend- 
ments to franchises limited to two years. The new plan in a few 
instances will decrease the fare for a short ride from ten cents to five 
cents and in most instances increase the fare. Held, that the exercise 
of the rights granted under the franchise amendments, the proposed 
zoning system and the increase and decrease in rates thereunder should be 
approved. Ordered accordingly. 

Eugene F. McKinley, for the petitioner. 

William E. Lyon, for property owners in the village of Mamar- 
oneck. 

Charles M. Baxter, jr., for the village of Mamaroneck. 

Fehtneix, Commissioner. — The New York and Stamford Rail- 
way Company operates a street surface railroad extending from 
Mechanic street in the city of New Eochelle, in a general easterly 
direction through the village of Larchmont, town of Mamaroneck, 
village of Mamaroneck, town of Harrison, town of Eye, village of 
Eye, and village of Port Chester, in Westchester county, and 
State of New York, and thence east in the State of Connecticut to 
the city of Stamford, Conn. Its trackage totals approximately 
twenty-six and thirty-seven hundredths miles, of which approxi- 
mately sixteen miles are in the State of New York. 

The company proposes a new fare zoning plan whereby it 
expects to increase its operating revenue. It at present operates 
on a fare zoning plan, there being three zones within this State, 
the second zone and the third zone overlapping a short distance. 
The zoning plan proposed divides the New York State portion of 
the road into four zones, zones two and three overlapping ; and an 
additional sub-zone is provided covering a portion of the territory 
in its proposed third zone and a portion of the territory in its 
proposed fourth zone. 



Petition of New Yobx & Stamford Railway Co. 109 

Public Service Commission, Second District [Vol.20] 

The following is a description of the proposed new zones : 

Zone 1: Western terminal, Mechanic street, in the city of 
New Rochelle, N. Y. ; eastern terminal, Dean place, in the village 
of Larchmont, N. Y. Between and including terminal points 
and all points intermediate, fare five cents, which includes trans- 
fers to and from The Westchester Electric Railroad Company's 
lines in New Rochelle. 

Zone 2: Western terminal, the west line of the village of 
Larchmont, N. Y., which point is a short distance west of Dean 
place; eastern terminal, the point where this corporation's railroad 
crosses the line dividing the townships of Harrison and Rye, which 
point is approximately 1,000 feet east of Summer street in the 
village of Rya Between and including terminal points and all 
points intermediate, fare five cents, which includes transfers to 
and from Larchmont depot line, also to and from certain points 
in the town of Mamaroneck reached by The Westchester Street 
Railroad Company's lines. 

Zone S: Western terminal, the point where this corporation's 
railroad crosses the line dividing the villages of Mamaroneck and 
Rye; eastern terminal, the point where this corporation's railroad 
crosses the line dividing the villages of Rye and Port Chester. 
Between and including terminal points and all points intermediate, 
fare five cents, which includes transfers to and from Rye Beach 
and other points in the village of Rye reached by this corporation's 
lines. 

Zone b: Western terminal, the point described as eastern ter- 
minal of Zone 3 ; eastern terminal, as to New York State traffic, 
the point where this corporation's railroad crosses the line dividing 
the States of New York and Connecticut. Between and including 
terminal points and all points intermediate, fare five cents, which 
includes transfers to and from local lines in the village of Port 
Chester. 

m 

Sub-zone A : Western terminal, Central avenue and Rye Beach, 
in the village of Rye, N. Y. ; eastern terminal, Mill street, in the 
village of Port Chester, N. Y. Between and including terminal 



110 State Department Reports 



[Vol.20] Public Service Commission, Second District 



points and all points intermediate, fare five cents. Passenger 
riding from points in the village of Eye, N. Y., east of and includ- 
ing Central avenue and Rye Beach, and paying a five cent fare, 
will upon request therefor and the payment of three cents be 
given transfer to any point in the village of Port Chester reached 
by the North and South Regent street, Westchester avenue, and 
North Main street lines of this corporation. Passenger riding 
from points in the village of Port Chester, N. Y., reached by the 
North and South Regent street, Westchester avenue, and North 
Main street lines of this corporation, and paying a five cent fare, 
will upon request therefor and the payment of three cents be 
given a transfer good to points in the village of Rye east of and 
including Central avenue and Rye Beach. 

For the purpose of showing the changes in fares that the pro- 
posed zoning would make from the fares under present zoning 
between various sections of this railroad, the following table has 
been prepared: 

Description of Territory 

A. Mechanic street, New Rochelle, to east city line, New 
Rochelle. 

B. East city line, New Rochelle, to Dean place, village of 
Larchmont. 

C. Dean place, village of Larchmont, to line dividing village of 
Mamaroneck and village of Rye. 

D. Line dividing villages of Mamaroneck and Rye to Summer 
street in the village of Rya 

E. Summer street in the village of Rye to line dividing town- 
ships of Harrison and Rye. 

F. Line dividing townships of Harrison and Rye to Central 
avenue and Rye Beach, village of Rye. 

G. Central avenue and Rye Beach, in the village of Rye ; and 
line dividing villages of Rye and Port Chester. 

H. Dividing line villages of Rye and Port Chester to points on 
local lines in Port Chester, namely North and South Regent street, 
Westchester avenue, and North Main street 



Petition of New York k Stamford Railway Co. Ill 



Public Service Commission, Second District 



[Vol. 20] 



J. All local lines in the village of Port Chester other than those 
named in territory H. 

K. Mill street, Port Chester. 

L. New York-Connecticut State line. 



And *"*^ 


A 


B 


C 


D 


E 


F 


G 


H 


J 


K 


L 


Present 
Proposed A 


5 
5 


10 
5 


10 
10 


10 
10 


10 
10 


15 
15 


15 
15 


15 
20 


15 
20 


15 
20 


15 
20 


Present 
Proposed B 




5 
5 


5 
5 


6 
5 


5 
5 


10 
10 


10 
10 


10 
15 


10 
15 


10 

15 


10 
15 


Present 
Proposed C 






5 
6 


5 
5 


5 
5 


10 
10 


10 
10 


10 
15 


10 
15 


10 
15 


10 
15 


Present 
Proposed D 








5 
5 


6 
5 


10 
5 


10 
5 


10 
10 


10 
10 


10 
10 


10 
10 


Present 
Proposed E 










5 
5 


5 
5 

5 
5 


5 
5 


5 
10 


5 

10 


5 
10 


5 

10 


Present 
Proposed F 












5 
5 


5 

10 


5 
10 


5 

10 


5 

10 


Present 
Proposed Q 














5 
5 


5 

8 


5 
5 


5 
5 


5 
5 


Present 
Proposed H 
















5 
5 


5 
5 


5 
5 


5 
5 


Present 
Proposed J 


















5 
5 


5 
5 


5 
5 


Present 
Proposed K 




















5 
5 


5 

5 


Present 
Proposed L 














k 








5 
5 



The new zoning plan retains all the transfer privileges ob- 
taining under the present zoning plan except as is provided in 
sub-zone A. It is also proposed to sell books of seventeen tickets 
for one dollar good between any point on this corporation's lines 
in the town of Harrison and Mill street, Port Chester, but no 
transfers in the village of Port Chester will be issued to passen- 
gers holding such tickets. This is a new regulation, and it is 
proposed to establish it in order to take care of certain mill op- 
eratives who under the present zoning plan can ride from Sum- 
mer street in the town of Harrison to Mill street in the village 
of Port Chester for five cents. The new zoning plan in a few 
instances will operate to decrease the fare for short-haul travel 
from ten cents to five cents; and in most instances it will in- 



IIS Stats Depaetment Reports 

[VoL20] Public Service Commission, Second District 

crease the fare where a passenger is now carried through three 
zones but under the new plan will be carried through four zones, 
from fifteen cents to twenty cents; and where now carried 
through two zones and under the new plan will be carried 
throve three zones, from ten cents to fifteen cents; and where 
the passenger is now carried in one zone and under the new plan 
will be carried through two zones, from five cents to ten cents. 

The necessity for increased revenue is shown by the following 
income statements. The statements for 1917 and 1918 are 
made up from the company's reports on file in this office, and the 
one for January, February, and March, 1919, was filed by the 
auditor of the company. 

1917 1918 

Operating revenues $394,259 50 $374,392 43 

Operating expenses 283, 187 26 286, 189 32 

Net operating revenue $111, 072 30 $88, 203 11 

Taxes accrued on electric railroad 28,318 85 23,112 45 

Income from electric railroad operations $82,753 45 $65,090 66 

Non-operating income, interest revenues 665 24 646 42 

Gross income $83, 418 69 $65, 737 08 

Deductions from gross income: 

Interest accrued on funded debt $58,300 00 $58,300 02 

Other interest deductions 12,292 32 12,427 92 

Kent from lease of other road and equipment. . 23,288 69 23,288 69 

Track and terminal privileges 45,951 03 47, 194 33 

Hire of equipment 684 12 613 36 

Miscellaneous debits 102 20 

Amortization of debt discount and expense. . . . 1,920 03 1,905 00 

Total deductions from gross income $142,436 19 $143,831 52 

Net corporate income (loss) $59,017 50 $78,094 44 

Corporate deficit at beginning of year 104,801 17 155,572 43 

Other additions to surplus 8,246 24 

Other deductions from surplus 2,924 97 

Corporate deficit at end of year $155,572 43 $236,591 84 



Petition of New York & Stamford Railway Co. 113 

Public Service Commission, Second District [Vol.20] 

■ 

1910 

January February March Total 

Operating revenues $25, 569 22 $24, 104 85 $27, 512 39 $77, 180 40 

Operating expenses 28,729 05 28,409 90 29,220 42 80,300 03 

Net operating revenue 

(loss) $3,100 43 $4,305 11 $1,714 03 $9,179 57 

Taxes 1,373 44 1,817 03 1,894 84 5,085 91 

Operating income (loss).. $4,533 87 $0,122 74 $3,008 87 $14,205 48 

Non-operating income 22 84 ' 33 43 24 32 80 59 

Total income $4,511 03 $0,089 31 $3,584 55 $14,184 89 

Deductions from income.. 8,049 98 8,049 90 8,049 90 24,149 90 

Net income (loss) $12,501 01 $14,139 27 $11,034 51 $38,334 79 



Mr. Miller, president of the company, testified that for the 
year ended December 31, 1918, the total cost per passenger ..'as 
six and eleven hundredths cents, while the total receipts per 
passenger were five and five hundredths cents ; making a net loss 
of one and five hundredths cents per passenger. He further tes- 
tified that for the three months ended March 31, 1919, the net 
loss per passenger had increased to two and four-tenths cents per 
passenger. 

The company has bonds outstanding $1,351,000; capital stock 
$500,000; demand notes $218,432. The fixed capital account 
as of December 31, 1918, shows a total of $1,925,609.33. 

On the above showing it is unnecessary at this time to make 
a valuation of the company's property, as the proposed change of 
zones and rates is made in an attempt to meet costs rather than 
to make a return on investment. 

The town of Rye, town of Harrison, village of Rye, and village 
of Port Chester have granted amendments to franchises held 
or used by applicant. These amendments are limited to two 
years. 

The exercise of the rights granted under the franchise amend- 
ments, the proposed zoning system, and the increases and de- 
State Dept. Kept. — Vol. 20 8 



114 State Department Reports 



[Vol. 20] Public Service Commission, Second District 

creases in rates thereunder should be approved. The company 
should be authorized to put into effect, on five days' notice a tariff 
stating the new zones and fares. 

An order has been made accordingly. 

All concur. 



In the Matter of the Complaint of Residents of the Incorporated 
Village of Rensselaer Falls and Vicinity, St. Lawrence 
County, against United States Railroad Administration — 
New York Central Railroad; Asking That the Station be 
Kept Open Longer Hours 

Case No. 6833 

(Public Service Commission, Second District, July 3, 1919) 

Increase of wages of station agent no excuse for curtailing service at railroad 
station. 

For fifty -eight years prior to March 28, 1919, an agent was at the 
Rensselaer Falls station at the arrival and departure of all passenger 
and freight trains. By an order of the United States Railroad Adminis- 
tration of March 29, 1919, the agent is on duty only from 7:45 A. M. 
until 3:45 P. m., with time off for his noonday meal. The freight revenues 
amount to about $24,000 per year and the passenger receipts to $4,600 
per year. The reason given for curtailing the service is the increase of 
wages voluntarily made by the Railroad Administration. Held, that the 
exorbitant increase of wages to the agent should not prejudice the patrons 
of the station and an order will be entered directing that the agent be 
in charge of the station from 7 a. m. to 7:55 P. if., allowing for meal 
time, so as not to interfere with the sale of tickets at least fifteen minutes 
before the arrival of each train. 

George H. Bowers, as attorney for complainants. 

Thomas Spratt and James F. Akin, as attorneys for respondent. 

Kellogg, Commissioner. — In this proceeding the residents of 
Rensselaer Falls, an incorporated village in the town of Canton, 
St. Lawrence county, have complained of the curtailment, bv the 



Rensselaer Falls v. U. S. Railroad Administration 115 

Public Service Commission, Second District [Vol. 20] 



United States Railroad Administration operating the New York 
Central Railroad, of the agency service at the railroad station 
at that place. 

Under the present conditions the agent, who also has entire 
charge of the express and telegraph business at that place, leaves 
his office for the day at 3 :45 p. m. 

This station is situated on a branch of the New York Central 
Railroad which connects Ogdensburg with DeKalb Junction. 
This branch is about nineteen miles long, and the station in 
question is situated between Heuvelton, from which it is distant 
about five miles, and DeKalb Junction, from which it is distant 
nearly seven miles. 

The village has a population of only about 400 inhabitants, 
but is the center of a surrounding agricultural country of some 
importance. 

It is alleged in the complaint, and stands without denial in the 
proceeding, that for fifty-eight years prior to March 28, 1919, 
an agent was present at this station, and had served the patrons 
of the road at the arrival and departure of all trains, both pasr 
senger and freight. 

Prior to December, 1917, he reported at the office at 7 o'clock 
in the morning, remaining on duty until the departure of the last 
train at night, which passed this station at shortly before 8 o'clock. 

He had a helper during at least part of this time, who assisted 
him in attending to the wants of the patrons of the office, and 
assisted consignees in obtaining their goods at times when the 
agent was busy with the sale of tickets on the eve of train 
departures. 

On December 8, 1918, a second operator was put on duty so 
that the former agent attended to the duties of the station from 6 
o'clock in the morning till 2 p. m. and the new operator superseded 
him at 2 p. m. and remained on duty till 10 p. m. 

This enlargement of the open hours of the station was due to 
the fact that at the time a through freight train was detoured 
over this branch in order to relieve congestion on another route, 
and it was important to have this office manned during these 



116 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

extended hours to protect it from collision. This plan, however, 
was abandoned and by an order of March 29, 1919, the extra 
telegrapher was withdrawn, and the former agent resumed his 
duties, but instead of discharging such duties during all the 
former hours of service, he is now on duty only from 7 :45 in the 
morning until 3 :45 in the afternoon, out of which time he takes 
his noonday meal when convenient. 

There has been no practical change in the volume of patronage 
of this office for many years. The freight revenues are about 
$24,000 per year on an average, and the passenger ticket receipts 
about $4,600. Between 500 and 600 telegrams are received and 
forwarded per annum. 

There is therefore no reason by reason of changed conditions 
in the patronage of the office, or in its receipts, for reducing 
either the passenger or freight service which has existed for more 
than half a century. 

On week days four passenger trains pass and stop at the station 
each way. A way freight passes each week day in one direction, 
one day going* to the east and the other day returning towards the 
west After 3:45 p. m. the hour at which the agent leaves the 
office, a passenger train passes each way, and after that time on 
alternate days a way freight runs from DeKalb Junction to 
Ogdensburg, and if it is as much as an hour late, which it usually 
is, passes without service or attention from the ticket agent. 

On account of the absence of the agent, no express to this 
station is transmitted on these afternoon trains, and no telegrams 
can be received or sent in the village after the hour of his departure 
from the office. Passengers boarding these afternoon trains must 
pay their fare on the trains, and have to attend to checking their 
baggage after they embark. 

A caretaker, the wife of the ticket agent, is employed at a 
compensation of fifteen dollars a month to keep the station open 
and lighted for the accommodation of passengers intending to 
board these trains. 

In view of the fact that for so long a period of time under 
private operation the services of the agent at this station were 



Rensselaeb Falls v. U. S. Railroad Administration 117 



Public Service Commission, Second District [Vol. 20] 

available at and preceding the times of the stopping of all trains 
thereat, and in view of the further fact that there has been no 
diminution in volume of business, the curtailment of service, as 
above indicated, is unwarranted, and the fractional service 
rendered is inadequate. 

This marked curtailment of service, being an abandonment of a 
material portion thereof, was effected without any permission 
applied for or granted by this Commission. 

The only excuse offered by the Railroad Administration for its 
action is that the wages of the agent have increased so as to render 
it much more expensive to maintain the service for the hours 
during which it had always previously been maintained. This 
increase in wages, however, was entirely voluntary on the part of 
the Railroad Administration. 

When the present ticket agent commenced his employment 
seventeen years ago, he worked during the hours already indicated 
from 7 o'clock in the morning until the passing of the last train 
at night, for the sum of thirty dollars per month. This was 
gradually increased until at the time the Government took posses- 
sion of the railroad in 1917, his salary was sixty-seven dollars and 
fifty cents a month. On October 1, 1918, his salary was increased 
25 per cent, and in December of that year it was raised to forty- 
eight cents an hour for eight hours, with an increase of 50 per 
cent for each hour overtime, which amounts, without any overtime, 
to one hundred and five dollars a month. 

Prior to this very large increase, he was entirely satisfied with 
his position. He received and still receives from thirty dollars to 
thirty-five dollars a month as commissions from the express com- 
pany in addition to his salary as railway agent, and a small amount 
for service as telegrapher. This raise in salary was unrequested 
by the agent, and he was entirely satisfied with his previous 
remuneration. 

He lives directly across the road from the station. The duties 
of the office are not onerous. It is not probable that if his work 
were concentrated in one continuous period of service it would 
exceed more than two or three hours a day. 



118 State Department Retorts 

[VoL20] Public Service Commission, Second District 

The increase was occasioned by the application of the rule 
establishing an eight hour service and providing a minimum 
wage. This rule, most admirable in many and perhaps in most 
localities, has no reasonable application to a situation such as this, 
where the work, although extended in time, is so inconsiderable in 
volume. 

If the Railroad Administration sees fit to pay an exorbitant and 
extravagant price to the agent, it certainly cannot upon such volun- 
tary action predicate the curtailment of service to the prejudice 
of the patrons of the office, especially where that service has been 
rendered for two generations, and there is no diminution of 
patronage. 

No complaint has been made of the limited service given on 
Sunday, and therefore no direction should be ordered in that 
regard, but as to week days, an order should be entered directing 
the maintenance of this office with an agent in charge from 
7 o'clock in the morning to the passing of the train at 7:55 at 
night, with such time out as is necessary for the agent to have 
his meals as will not interfere with his presence at the station 
for the purpose of selling tickets to patrons for at least fifteen 
minutes before the arrival of each train. 

Although a helper was maintained at this office for many years, 
many more busy stations are served without a helper, and the 
circumstances do not require a restoration of such assistance. The 
inconvenience accruing to patrons of the office in waiting for 
their freight a few moments, at times when the agent is engaged 
in selling tickets to patrons on the approaching arrival of trains, 
is not sufficient to authorize the direction of restoration of the 
helper to duty by order of this Commission. 

All concur. 



Schenectady Railway Co. — Increased Fakes, etc. 119 

Public Service Commission, Second District [Vol. 20] 



In the Matter of Passenger Tariff Filed by the Schenectady 
Railway Company, Designated as its P. S. C. — 2 N. Y. — 
No. 22, Proposing Increased Fares, Rates, Charges, etc. 

In the Matter of the Petition (or Complaint) of Schenec- 
tady Railway Company, under Subdivision 1 of Section 49 
of the Public Service Commissions Law, and Section 181 of 
the Railroad Law, for Permission to Increase Certain Pas- 
senger Fares 

Case No. 6583 

(Public Service Commission, Second District, July 8, 1919) 

Commutation tickets — order of May so, 1919 (ao State Dept. Rep. 25), 
modified. 

By the Commission. — On June 16, 1919, the Schenectady 
Railway Company, under subdivision 2, section 48 of the Public 
Service Commissions Law, applied to this Commission requesting 
that the Commission modify its order in Case No. 6583 of date 
May 20, 1919 (20 State Dept. Rep. 25), to permit the railway 
company to change the form of its commutation tickets and the 
rules governing sale and use of such tickets and in case such 
petition was granted to permit the company to file on short notice 
a tariff schedule providing for the sale of commutation tickets 
in the new form and at the present prices therefor but subject to 
ths new conditions governing use. This company is now selling 
monthly commutation tickets between Schenectady and the follow- 
ing points: Ballston Junction, N. Y., Albany, X. Y., and Troy, 
N". Y., at uniform price of ten dollars and forty cents, and between 
Schenectady, N. Y., and Ballston Lake, N. Y., at price of 
five dollars and forty cents. Such tickets are issued on the 
first day of each month and contain a sufficient number of coupons 
good for one-way passage going and returning between points 
named on the ticket for each working day of the month for which 
issued; they are good for the exclusive use of the purchaser and 
subject to forfeit if presented by any other person ; the coupons 
are good for passage only on the dates designated on the fftce 



120 State Department Reports 

[Vol.20] Public Service Commission, Second District 

thereof, the entire ticket expiring with the close of the month 
for which issued. The company requests permission to sell in 
place of such monthly commutation tickets a fifty-four trip com- 
mutation ticket between the points hereinbefore specified and at 
the same prices good only for use by the person named thereon if 
used within thirty days from and including date of sale but not 
good for transportation on Sundays or legal holidays. 

Informal complaints have been made to the Commission regard- 
ing the present form of commutation ticket and the restricted use 
of the coupons contained, and it appearing to the Commission 
that the proposed new form and conditions of sale and use if 
established would satisfy such complaints and that in all respects 
would be more satisfactory to the company's patrons generally 
using such tickets, it is 

Ordered: That this Commission's order of date May 20, 1919, 
in Case No. 6583, supra, be and hereby is modified to permit the 
establishment by the Schenectady Railway Company of rules 
governing sale and use of commutation tickets as hereinafter pre- 
scribed, and said Schenectady Railway Company be and hereby 
is authorized to file, on not less than five days' notice effective 
August 1, 1919, a tariff schedule amending its passenger tariff 
P. S. 0.— 2 N. Y. — No. 19 and Supplement No. 18 thereto 
currently in effect and provide therein the following: 

Fifty-four trip commutation tickets will be sold between Sche- 
nectady, N. Y., and Ballston Lake, N. Y., for $5.40; between 
Schenectady, N. Y., and Ballston Junction, N. Y., for $10.40 ; 
between Schenectady, N. Y., and Albany, N. Y., for $10.40; 
between Schenectady, N. Y., and Troy, N. Y., for $10.40; 
subject to the following conditions of sale and use: 

First. This ticket is only good for use by the person named 
hereon and only if used within thirty days from and including 
date of sale. 

Second. The trip coupons contained will be accepted for trans- 
portation in either direction between the points specified on busi- 
ness days but will not be accepted for transportation on Sundays 
or legal holidays. 



Village of Sag Harbor v. Long Island Gas Corp. 121 

Public Service Commission, Second District [Vol. 20] 



Third. If this ticket is presented for transportation by any 
other person than the one entitled to use it, it will be taken up 
by the conductor and its further use forfeited by the owner. 

Fourth. This ticket must be presented to conductor for each 
trip and detachments therefrom made only by him. Detached 
coupon will in no case be accepted for transportation. 

Fifth. Unused or partially used tickets if presented by legal 
owner through the office of the general passenger agent at Schenec- 
tady, N. Y., will be redeemed by charging full tariff fare for the 
number of trips used. The difference between such amount and 
the price paid for the ticket will be refunded. 



In the Matter of the Complaint, under Sections 71 and 72 
Public Service Commissions Law, of the Trustees of the 
Village of Sag Hakbor, Long Island, against Long Island 
Gas Corporation, as to Proposed Rates for Gas 

Case No. 6664 

(Public Service Commission, Second District, July 8, 1919) 

Gai companies — increase in rates allowed. 

The increased rates filed by the company provide for one dollar per 
month minimum charge, and for the use of less than 4,000 cubic feet 
two dollars per 1,000 and for 4,000 cubic feet and over one dollar and 
eighty cents per 1,000. Certain portions of the territory served have 
consented to an increase in rates for a period of one year after the sign- 
ing of the treaty of peace with Germany. The revenue from operation 
for eleven months ending November 30, 1918, amounted to $19,40&71, 
the expenses to $23,041.48, leaving an operating deficit of $3,634.77. 
Interest and other charges for the same period amount to $10,841.19, 
making a total deficit for the eleven months of $14,475.96. Held, that 
the proposed scheduled rates are reasonable in amount and should be 
allowed; that the minimum charge of one dollar per month is warranted 
and is not unlawful or discriminative, and that the rates as filed should 
remain in force for one year from the signing of peace with Germany. 

Cortland Kiernan, for the complainants. 

Martin S. Decker and Elmer B. Sanford, for the defendant. 



122 State Department Reports 



(Vol. 20] Public Service Commission, Second District 



Babhite, Commissioner. — The complaint in this case is made 
by the president and trustees of the village of Sag Harbor against 
the Long Island Gas Corporation, upon the ground that the com- 
pany has filed and is operating under a schedule fixing rates for 
gas which are in exoess of, and, it is claimed, contrary to the pro- 
visions of a franchise granted to the company by the village. The 
provision of the franchise upon which the village rests its case 
provides : "And upon further condition that the price charged by 
said company for gas sold to any person or corporation shall not 
exceed $2.25 per thousand cubic feet for illuminating gas, and 
not to exceed $1.75 per thousand cubic feet for fuel gas, unless at 
any time it can be proved that the gas cannot be manufactured at a 
profit at the above rates." The proposed rate provides for a one 
dollar per month minimum charge and for the use of anything 
less than 4,000 cubic feet the price is two dollars per 1,000, and 
for the named amount or over the price is one dollar and eighty 
cents per 1,000. 

The company operates in the villages of Sag Harbor and South- 
ampton, and the intermediate territory, which includes the unin- 
corporated villages of Bridgehampton and Water Mill, in the town 
of Southampton. The village of Southampton has relieved the 
company from the restriction clause in its franchise and has con- 
sented that the company may charge at the rate of two dollars per 
1,000 feet for gas and a minimum charge of one dollar per meter 
per month for a period of one year after the signing of the treaty 
of peace by the United States and Germany, and the Allies. The 
town of Southampton has made a similar concession. 

The complainants make two points against the filed schedule 
rate: First, that the increase in the rate for fuel gas from one dol- 
lar and seventy-five cents to two dollars per 1,000 cubic feet is 
properly with this Commission for its approval or disapproval ; 
second, that the minimum charge is unwarranted, under the 
franchise; is unlawful, is discriminative and unjust, afid should 
not be allowed. 

Quite recently the Court of Appeals of the State of New York 
and the Supreme Court of the United States have rendered deci- 
sions which declare that the test of legality of a rate named 



Village of Sag Harbor t\ Long Island Gas Corp. 123 



Public Service Commission, Second District [Vol. 20] 



in a franchise made by a municipality for the benefit of its inhab- 
itants, or in a contract between the company and a consumer is 
not the amount named in the franchise or the private contract, 
but that the State in the exercise of its police power, has the right 
to fix rates which supersede the agreed amount. 

In People ex rel. Village of South Glens Falls v. Public Service 
Commission, Second District, 225 N. Y. 216, it is held that the 
regulations regarding rates which municipalities may impose in 
granting licenses or permission to use their streets by public serv- 
ice corporations cannot be said to form contracts beyond the inher- 
ent police power of the Legislature to modify for the public wel- 
fare. The same case holds that the power to regulate charges has 
been conferred upon this Public Service Commission by the 
Legislature. 

In Union Dry Goods Company v. Georgia Public Service Cor- 
poration, 248 U. S. 372, the court lays down the doctrine that 
when a state fixes reasonable rates to be charged by a corporation 
for supplying electricity to the inhabitants of a city which super- 
sede lower rates agreed on in an existing time contract made 
previously between the company and a consumer, such action is a 
legitimate effect of a valid exercise of the police power, not 
impairing the obligation of the contract or depriving the consumer 
of property without due process. 

In the case at bar the question of the effect of a contract made 
by a company to furnish the municipality itself with light is not 
under consideration. 

The gas company gives evidence of its financial condition, the 
truthfulness of which is not disputed by complainants nor did 
they offer evidence in contradiction. In a brief submitted by the 
complainants they say that the statements filed by the company, 
while disclosing much that is open to criticism, convinces one, 
upon examination, that the company really is " in a very bad 
financial condition." Our examination leads to the same con- 
clusion. The general balance sheet of the company on December 
31, 1917, shows assets of $227,774.27 and liabilities of $242,549.- 
25, — a deficit of $14,774.98. The general balance sheet for 
November 30, 1918, eleven months later, contains assets amount- 



124 State Department Repokts 



[Vol 20] Public Service Commission, Second District 



ing to $215,438, and liabilities which total $244,347.91, repre- 
senting a deficit of $28,909.91. The revenue from operation for 
eleven months ending November 30, 1918, amounts to $19,406.71. 
The expense of operating for the same time is $23,041.48, leaving 
an actual operating deficit of $3,634.77. Adding to this amount 
$10,841.19,. the amount of interest and other general charges, 
brings the total to $14,475.96, .as the shortage in the business 
operations of the company for the period named. 

Using as a basis the franchise rates in Sag Harbor and the new 
proposed rates in territory served by the company outside of Sag 
Harbor, the revenue of the company would have been increased 
$3,009.83 for the eleven months named, still leaving a deficit of 
$11,466.13. Had the proposed rate been in operation for eleven 
months of 1918, the actual revenue would have exceeded the actual 
operating expenses by $1,252.05, upon the assumption that all the 
meters remained in service under the new rate, but there would 
still be a deficit of $9,589.14 when the fixed charges are con- 
sidered. It cannot be disputed that the proposed scheduled rates 
are reasonable in amount and should be allowed to remain. 

The second point raised by the complainants, — that the mini- 
mum charge of one dollar per month is unwarranted under the 
franchise, is unlawful and discriminative — cannot be sustained. 

On the 30th day of November, 1918, the company had 780 
meters in its territory. Of this number an average of 194 per 
month for a period of eleven months, showed an income of less 
than one dollar per month at the rate of two dollars per 1,000 
feet. An average of 57 of the meters per month showed no con- 
sumption of gas. Each one of these meters was a constant source 
of expense to the company. There is the cost of installing service, 
a force of employees must be kept ready to supply gas at any 
moment to these special customers or to others and the meters 
must be regularly read. It certainly would be unjust that these 
customers who use a sufficiently large quantity of gas to make 
service to them beneficial, should be called upon to pay the expense 
incurred on behalf of those customers who make a very small 
return or no return at all to the company. The sum named as a 
minimum charge is fair in amount. There is no discrimination 



Matter of American Railway Express Co. 125 



Public Service Commission, Second District [Vol. 20] 



in fixing a minimum rate when all persons under the same con- 
ditions and circumstances are subject to that rate. The company 
has divided its customers into classes, placing all who use gas 
within certain prescribed amounts in one class and giving to them 
the same rata Under this classification of the company all per- 
sons who use not to exceed 500 cubic feet per month pay one dol- 
lar per month ; all who use between 500 and 4,000 cubic feet per 
month, pay two dollars per 1,000 cubic feet; all who use 4,000 or 
over cubic feet per month, pay at the rate of one dollar and eighty 
cents per 1,000 cubic feet, and those who accept straight line meter 
service and use 5,000,000 cubic feet per year or over, pay one 
dollar and twenty-five cents per 1,000 cubic feet. 

The rates of the company are exactly in line with that proper 
and common business policy of giving to the large consumer an 
advantage in price. 

In the territory outside of Sag Harbor the franchise provisions 
with regard to rates have been superseded by agreement for a 
period of one year after the signing of the treaty of peace. The 
rates as filed should remain in force for the same period of time, 
when, if necessary, a proper determination as to rates may be 
made applicable to the whole territory in which the company 
operates. 

All concur. 



In the Matter of Discontinuance by American Railway Express 
Company of Sunday Pick-up and Delivery Service, and Limi- 
tation of Pick-up Service on Week Days to Five O'clock p. m., 
in the City of Buffalo 

Case No. 6816 

(Public Service Commission, Second District, July 8, 1919) 

Express companies — rule eliminating Sunday pick-up service commended and 
sustained — rule limiting week day pick-up service to 5 P. M. sustained. 

It appears that the only inconvenience in not having the pick-up serv- 
ice by the express company on Sundays and the limitation of the service 
on week days to 5 p. m. is to require shippers to deliver their shipments 



126 State Department Reports 

[VoL 20] Public Service Commission, Second District 

direct to the offices of the express company, which are kept open for 
receiving goods during the whole twenty-four hours of the day, including 
Sundays. The express company also delivers perishable incoming freight 
arriving on the platforms on Sundays. The saving to the express com- 
pany under the rule now in force amounts to about $8,750 per month, 
and even with this saving in expense the business in Buffalo is conducted 
at a loss. It also appears that the rule complained of is of general 
application and the employees of the company object strongly to working 
on Sundays. 

From the evidence introduced and taking into consideration the pro- 
visions of section 2143 of the Penal Law prohibiting labor on Sunday 
excepting works of necessity and charity, the Commission is of the opin- 
ion that the aim of the express company to have the working hours of 
its men conform to those of general lines of business and to eliminate 
Sunday work in the vehicle service so that the men can spend their 
Sundays at home is a wise one and should be encouraged, and the good 
order, health and comfort of the community are promoted by the rule 
eliminating Sunday vehicle service, and that the week day limitation 
to 5 p. M. is reasonable. 

A. M. Hartung, attorney for the American Railway Express 
Company. 

F. E. Matthews, superintendent of Buffalo division, American 
Railway Express Company. 

H. S. Shafer, representing Ward & Ward, Inc. 

J. A. McCall, representing Sinclair, Rooney & Co. 

Freeman Bradford, traffic manager, Buffalo Produce Exchange. 

C. A. Taylor, as secretary of the Motion Picture Exchange 
Managers' Association of New York State. 

Frank E. Williams, as secretary, and A. J. Keating, as manager 
traffic service bureau, Buffalo Chamber of Commerce. 

Frederic C. Rupp, assistant corporation counsel, for the city of 
Buffalo. 

Hill, Chairman. — Ward and Ward, Inc., bakers at Buffalo, 
having complained against the discontinuance of Sunday pick-up 
and delivery service in Buffalo, the Commission issued its order 
under date of April 8, 1919, directing the American Railway 



Matter of American Railway Express Co. 12? 



Public Service Commission, Second District [VoL 20] 

Express Company to show cause why such service should not he 
resumed. Upon the hearing the Buffalo Chamber of Commerce 
and various merchants appeared with additional complaints, and, 
as some of them complained that the limiting of pick-up service on 
week days to 5 o'clock p. m. was objectionable, the inquiry was 
extended to cover that subject also. It appeared that the pre- 
decessor of the respondent, the American Express Company, had 
in 1917 put into effect an order discontinuing the Sunday service 
and terminating the week-day service at 5 p. m., and that respond- 
ent was endeavoring to adhere to this practice. The complaint 
grew out of the fact that the order had not been strictly complied 
with by the local agent and that a limited number of regular cus- 
tomers had had extra service e inded to them because of their 
apparent urgent need therefor, in the shape both of Sunday serv- 
ice and week-day service after 5 o'clock p. m. When in April, 
1919, the respondent attempted to return to a strict observance 
of the order 'these complaints resulted. 

Public service corporations have the right to institute reasonable 
rules for the conduct of their business, and the question is whether 
or not the rule in question is reasonable. The rules which a com- 
mon carrier adopts are presumptively reasonable and the burden 
of establishing their unreasonableness is on him who assails them. 
Garricott v. N. Y. State Rys., 223 N. Y. 9; Piatt v. LeCocq, 
158 Fed. Repr. 723, and cases there cited. 

A striking aspect of the complaints and of the situation in Buf- 
falo as to the demand for the classes of service in question as dis- 
closed by the evidence, is that the demand is in no sense general 
but is confined to a very limited number of customers carrying on 
businesses which for reasons peculiar to themselves could make use 
of these special services. To be specific, the businesses in question 
are baking, millinery, fish, ice cream, and motion picture 
exchanges. But only certain bakers and ice cream purveyors and 
only one milliner, so far as appeared, required the service, and 
most of the fish dealers did not complain of the pick-up service but 
desired that incoming shipments should be delivered out of hours 
to prevent spoiling, which the express company is willing to do ; 
and but one fish company demanded pick-up service beyond the 



128 State Department Repobts 



[Vol.20] Public Service Commission, Second District 



time limited in the regulation. The film companies it seems 
gather up the films after theatre hours and of course would be 
accommodated by a late night service. It appears also that the 
only inconvenience resulting from the rule is that shippers desir- 
ing to ship out of hours must furnish their own pick-up service, 
or, in other words, deliver their shipments direct to the express 
company's offices, which are kept open for the receipt of ship- 
ments during the entire twenty-four hours every day, including 
Sunday, although the freight houses close at 5 o'clock. The com- 
pany also delivers perishable incoming shipments arriving on the 
platforms on Sundays if they would otherwise spoil. The question 
of reasonableness is thus greatly narrowed, because we find it is not 
a question of whether the shipments are prevented from moving 
at all as would be the case were the receiving offices closed after 
hours and on Sundays but whether or not it is reasonable that a 
very limited number of shippers who can make use of special 
service out of hours should themselves be put to the expense of 
rendering such service. 

Examining the evidence we find that the General Baking Com- 
pany makes daily shipments to outside points of bread which is 
baked in the afternoon; the baking begins at noon and is not 
ready for the last shipment until 8 p. m. They could bake in the 
morning and thus ship by 5 o'clock, but the objection is that the 
bread in the hands of the consumer the next morning would be 
three hours less fresh and in order to supply customers on Mon- 
day they must make a Sunday shipment. 

Sinclair, Rooney & Co., manufacturing milliners, have a rush 
period of three months each spring and fall, during which, by 
reason of the volume of business they are not able to ship until 
7 or 7:30 p. m., and they ship in the evening to save a day in 
delivery. Their goods are not perishable (at least in the commer- 
cial sense) and only a small percentage of their shipments are 
intrastate. It did not appear whether there were others in their 
trade similarly circumstanced. It is not apparent to the mascu- 
line mind why a difference of a day in the delivery of a woman's 
new hat should be made the subject of serious consideration in 



Matter of American Railway Express Co. 129 

Public Service Commission, Second District [Vol. 20] 

commercial circles and in the determinations of regulatory bodies. 
If it were an old hat, and perhaps the only one the woman pos- 
sessed we could more clearly conceive the exigency of prompt 
delivery. Nevertheless inasmuch as both the express company's 
officials and the manufacturing milliner treated the subject seri- 
ously, we must conclude that the immutable laws of trade, 
adapted as they are and must be to those of social usage, render it 
important that at certain seasons of the year the prompt or 
" rush " delivery of these expensive articles of commerce is as 
important as that of fresh bread, ice cream, fish and movie films, 
and will treat the matter accordingly. 

Representatives of four fish companies testified, but with one 
exception, their only concern was with incoming shipments which 
would spoil if held over for Monday delivery, but it seems that 
such shipments are delivered without delay. One such company 
represented that it frequently received wire orders late in the day 
and thought it should have week-day pick-up service up to 6 p. m. 
It would seem, however, that it should be able to conform to the 
usage of its competitors. 

The two ice cream companies represented were more particu- 
larly concerned with respect to the practices of the company in 
connection with deliveries at the other end of their outgoing ship- 
ments, which are not the subject of consideration in this case. 

The manager of one of the motion picture exchanges testified 
that the films are assembled at their place of business after even- 
ing theatre hours and delivered to the express company about mid- 
night by their own trucks. As matter of course they would pre- 
fer that the express company should pick them up. 

This is all the evidence on the part of complainants, and it 

did not appear either by direct testimony or by inference as might 

naturally have been expected that the particular cases developed 

were typical of large classes of cases of similar character, and 

while it will be assumed that the desire for the extended service 

in Buffalo is not absolutely confined to those who appeared and 

testified, it is not apparent that the demand extends very much 

farther, although of course others could and would use it were it 

supplied. 

Stact Dipt. Ret.— Vol. 20 9 



130 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

On the part of the express company it was shown that while the 
rule of 1917 was not promulgated for the purpose of saving 
expense, the saving is considerable, about $8,750 per month in 
Buffalo. It also appeared that the Buffalo express business is 
handled at a loss and that as an entirety the business of the 
respondent is unprofitable. The controlling reason for the rule, 
however, was stated by Mr. F. E. Matthews, superintendent of the 
Buffalo division, as follows: " We had difficulty in getting men to 
perform the service. Our men as a class object to Sunday work, 
particularly in the vehicle service, and in an effort to make our 
business day and our business week conform as nearly as possible 
to the established business day of other concerns and to create 
decent working conditions for the men * * *. The service is 
unduly expensive, requires the keeping out of a certain amount of 
equipment that is not needed all the time and has to be kept out 
during the entire day (this related to Sunday service) in order to 
perform this particular service * * *. We cannot turn out from 
six to eight or ten vehicles on the street alone. We have to have 
on duty a supervisory force so as to look after them, foreman and 
houseman and those who perform work in connection with the 
drivers and additional employees at the stations and wagon super- 
visors. * * *. It is a fact in managing the vehicle service such as 
we had on Sunday we would have to scour around among all the 
men to get them to work on Sunday, none of them really willing 
to work on Sunday. We really had to force them to come out 
* * *. None of them want to work on Sunday. We pay them 
when they do that, but regardless of that they do not want to work. 
They want their straight working week with a day off and they 
want that day to be Sunday. Men come to me and say c I want to 
go to church, I want to be with my family on Sunday.' We have 
been through that very thoroughly.' ' 

Mr. Louis R. Gwyn, general manager of the Empire State de- 
partment of the express company, stated the reasons to be to make 
a more endurable working day for the employees, and also because 
there always has been a tendency for unusual and special service 
to grow ; " it is almost impossible to confine it so that we felt we 



Matter of American Railway Express Co. 131 

Public Service Commission, Second District [Vol. 20] 

should have a definite, reasonable working period for the street 
service. In addition to that there have been at various times 
complaints from the men objecting. It has always been a difficult 
thing to get men to work on Sundays. It wasn't that they bbjected 
to working without pay; they objected to working on Sundays 
whether paid or not; they wanted to be home Sundays. They 
also want, as a matter of common knowledge, a short working day, 
and we now have before us the necessity of still further shorten- 
ing our day to an eight hour basis. * * *. The men themselves have 
told me, they told me at Washington and in New York, that it 
wasn't that they were looking for overtime; they want to get 
home; and of course we have got to take cognizance of their desire, 
it has been expressed so forcibly. The length of the day now is 
nine hours." 

It also appeared that the rule in question is of general applica- 
tion and is not peculiar to Buffalo. 

The respondent also pointed out the provisions of section 2143 
of the Penal Code prohibiting labor on Sunday excepting works 
of necessity and charity but which further provides that such 
works are to be deemed to include whatever is needful during the 
day for the good order, health or comfort of the community. 

The question is solely that of the reasonableness of the rule in 
question. As shown above, it is presumptively reasonable. Do 
the facts disclosed in the record overcome this presumption so that 
the Commission would be justified in basing thereon a determina- 
tion that it is unreasonable ? On the contrary, I consider the rule 
just and wholesome, in view of the conditions shown, and if it is 
felt that the urgency of the shipments in question is justified 
by the requirements of the " good order, health or comfort of the 
community," the fact standing alone that the receiving offices 
of the express company afford facilities for the receipt of ship- 
ments at all hours, completely satisfies any such urgency if it can 
be said to exist. 

While greater latitude is now observed than formerly with 
regard to Sunday observance, it is noticeable that the liberal move- 
ment in that regard is not in the direction of converting the day of 



132 State Department Reports 



[Vol.20] Public Service Commission, Second District 



rest into a working day, but indicates instead a tendency to per- 
mit a wider choice on the part of the individual as to what form 
of rest or recreation he will adopt. " In this state the Sabbath 
exists as a day of rest by statute and also by the common-law, and 
the legislature has passed acts regulating its observance. Sunday 
laws exist in nearly every state in the Union. The statutes of 
the different states differ somewhat in details and strictness, but 
in nearly all the states common labor and traffic are prohibited. " 
People v. Zimmerman, 95 N. Y. Supp. 136-138. 

We think the aim of the respondent to have the working hours 
of its men conform to those of general lines of business and to 
eliminate Sunday work in the vehicle service so that the men 
can spend their Sundays at home, is a wise one and should be 
encouraged, and we fail to find any feature in the evidence which 
tends to overcome the presumption of the reasonableness of the 
rule under, discussion. 

We have considered the case thus at length, not by reason of 
any apparent perplexity which is created by the facts, but because 
of the importance which the respondent attaches to the determina- 
tion which the Commission is called upon to make. To us it 
seems clear that the good order, health and comfort of the com- 
munity are promoted rather than retarded by the rule in question 
affecting the Sunday service, and that every consideration 
involved, whether of law, of ethics or of morals, must be resolved 
in its favor; and as to the week-day limitation to 5 o'clock p. m., 
we find no ground upon which we can determine that it is unrea- 
sonable. 

For the reasons stated the complaints will be dismissed and the 
order to show cause discharged. 

All concur. 



Petition of TJ. S. Railboad Administration 133 



Public Service Commission, Second District [Vol. 20] 



In the Matter of the Petition of United States Railboad 
Administration — Delaware and Hudson Railboad — 
under Section 54, Railroad Law, for Consent to the Discontinu- 
ance of the Services of an Agent at the South Corinth Station 
on said Railroad 

Case No. 6877 

(Public Service Commission, Second District, July 8, 1019) 

Application denied — opinion in "Petition of United States Railroad Adminis- 
tration, Boston & Maine Railroad, to discontinue the Wayville and 
Reynolds stations," ig State Dept..Rep. ao6, followed. 

The station in question has been maintained as an agency station 
since the construction of the railroad over fifty years ago. If discon- 
tinued its patrons would have to transact their business at the next 
nearest station three and three-tenths miles distant. By voluntary action 
of the Railroad Administration the agent's salary has been increased 
to such a large degree as to cause the operation of the station to be 
unprofitable. Held, that the rule enunciated in " Petition of the United 
States Railroad Administration, Boston & Maine Railroad, to Discon- 
tinue the Wayville and Reynolds Stations," 19 State Dept. Rep. 206, 
should be applied in this case and unless and until it is developed that 
post-war conditions indicate a marked falling off in this station from 
pre-war revenues and economical principles are applied in its mainte- 
nance an order of discontinuance, reversing the custom of over fiity 
years, should not be allowed. Application denied. 

Lewis E. Carr, Newton R. Cass and Lewis E. Carr, Jr., for the 
petitioner. 

Clarence B. Kilmer, attorney for objectors. 

F. E. Harvey & Son (by F. E. Harvey), William A. Rowland, 
R. H. Densmore, Frank Tibbits, Wallace Howe, Charles Atwell, 
D. G. Eggleston, J. E. Angell, Richard Van Bnren, D. M. Cloke 
and Mrs. Yates Barber, in opposition. 

Kellogg, Commissioner. — This is an application to discon- 
tinue the railroad station at South Corinth in Saratoga county as 
an agency station and maintain there a non-agency station only. 

The application is based upon the following allegation in the 



134 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

petition : " That during the last few years there was a marked 
decrease in both freight and passenger business done at South 
Corinth, as compared with previous years, and together with the 
increased cost of maintaining this agency it is no longer neces- 
sary nor profitable to maintain an agency at this point." 

To support this contention schedules have been submitted show- 
ing the freight revenues and the passenger ticket sales at the 
station in question during the years 1917 and 1918, and five 
months of 1919. They are as follows: 

Freight Passenger 

revenues receipts Totals 

1917 $974 09 $231 91 $1206 00 

1918 624 46 153 78 778 24 

1919 (5 months) 352 79 • 76 09 428 09 



It will thus be noticed that there has been a slight improvement 
in the average monthly business during the five months of 1919 
over the average monthly business of 1918, but that the revenue 
is still very small. 

The salary of the station agent paid by the railroad amounted 
in 1917 to $816.80, and in 1918 to $1080.15. In addition he 
received a small compensation from the express and telegraph 
companies for handling their business at this place. He is now 
under the minimum wage rule made operative by the Railroad 
Administration receiving $105 a month which will make his com- 
pensation for the current year, if continued throughout, still 
larger. 

In 1917, therefore, the receipts of the station were about $400 
more than the salary of the agent, but since that date, the salary 
of the agent has exceeded the combined freight revenue and pas- 
senger receipts of the office. 

It is this shifting of the balance on which the applicant relies 
in its demand for the relief sought in this proceeding, not taking 
into consideration any of the other costs of handling the business. 

It appeared from the evidence at the hearing, however, that 
although the income of this station is not substantial yet it was 
very materially interfered with by war conditions. The principal 



Petition of U. S. Railroad Administratiox 135 

Public Service Commission, Second District [Vol. 20] 

freight export is wood, much of which is used in the manufacture 
of brick. One witness testified and it was not disputed that 
tributary to this station there are still standing between 500,000 
and 1,000,000 cords of wood available for this purpose. 

It appears from the evidence of the fuel administrator of the 
county that the manufacturers of brick to whom this wood had 
previously been sold, were very seriously curtailed in their opera- 
tions by orders issued during the war and that various embargoes 
were placed upon transportation from the station in question in 
1918. 

These conditions undoubtedly at that time very seriously inter- 
fered with the revenue which would otherwise have been derived 
from this station. The fact that the wood could not be shipped, 
and was not marketable, discouraged the operators from continuing 
this business, and there has been no substantial quantity shipped 
since for the reason that wood used for brick manufacture must 
be cut and dried for a period of from six to nine months before 
it is ready for shipment and use, so that operations of this charac- 
ter have not as yet been resumed. 

This station has been maintained as an agency station since 
the construction of the road over fifty years ago. The nearest 
station is Kings, which is about three and three-tenths miles disr 
tant. If the agent is withdrawn at the South Corinth station 
and a caretaker substituted, express cannot be handled at that 
point, telegrams cannot be received there, and shippers and con- 
signees of freight which is not prepaid would have to attend to 
payment thereof at Kings. This, of course, will result in an 
inconvenience, to which the patrons of this office are not accus- 
tomed. Against this they protest. 

It would not seem proper to order the abandonment of a station 
merely upon a showing that owing to conditions existing during 
the war, a smaller volume of business is transacted than pre- 
viously. 

As to its comparison with previous years prior to 1917 no 
figures have been submitted but undoubtedly during the year 
1018, which came entirely within the war period, there is a sub- 
stantial decrease. 



136 State Dbpautment Reports 



[Vol. 20] Public Service Commission, Second District 



The fact that the salary of the agent has exceeded the freight 
revenues and passenger receipts was due to the very decided 
increase arising from the application of the mimimum wage order. 
In 1917 the salary of the agent was $70. By the increase to 
forty-eight cents an hour, his wages rose to about $105 a month. 

Here, therefore, another instance is called to the attention of 
this Commission of a case where by voluntary action of the Rail- 
road Administration the salary of the agent is raised to such an 
unnecessarily large amount that the operation of the station as an 
agency one becomes unprofitable, and its discontinuance is asked 
for. 

If by the application of a general rule which is grotesquely 
inapplicable to such a situation the maintenance of an agency 
station becomes unprofitable, certainly the patrons of the office 
should not be made to suffer by being deprived of facilities which 
they have enjoyed during the life time of most of them. 

No one benefits by the failure of the Railroad Administration 
in a case like this to limit the wages of the agent to a proper 
compensation for the services rendered. It is not a kindness to 
such agent to raise his wages to a sum so large that the business 
will not stand it, and then abolish his position. 

The principle which was enunciated by this Commission in 
Case No. 663S, entitled " Petition of the United States Railroad 
Administration, Boston and Maine Railroad, to discontinue the 
Wayville and Reynolds stations," decided April 22, 1919 (19 
State Dept. Rep. 206), and in line with the other decisions of this 
body, should be applied here. 

There the rule now applicable was announced in the following 
terms : " The problem to be solved in these cases is not whether 
the stations are so expensive that the company ought not to be 
burdened with their upkeep, but whether some station arrange- 
ments can be made that will reasonably take care of the business 
offered and still not make too great a loss. The railroad should, 
in each instance, provide the most economical plan for conducting 
the station business. If the most economical plan requires a 
greater expenditure than the public convenience reasonably war- 
rants, then discontinuance should be ordered." 



FlTZGIBBONB V. UNITED STATES R. R. ADMINISTRATION 137 
Public Service Commission, Second District [Vol.20] 

There has in this case been no attempt to economize, but on the 
other hand an unnecessarily large expenditure for the agent's 
salary has been ordered. 

The revenues of this station have been always small but the 
cost of operation has been correspondingly low, and would con- 
tinue to be if the agent were not recompensed beyond the reason- 
able value of his services. 

The diminution of receipts is on account of temporary condi- 
tions due to the war, and the increase in expenditure is due to an 
unnecessary increase by the Railroad Administration of the salary 
of the agent. 

Unless and until it is developed that post-war conditions indi- 
cate a marked falling off in this station from pre-war revenues, 
and economical principles are applied in its maintenance, an 
order of discontinuance, reversing the custom of over fifty years, 
should not be allowed. This application should be denied. 

All concur. 



In the Matter of the Complaint of John Fitzgibbons, Legisla- 
tive Representative of the Brotherhood of Railroad Trainmen 
of the State of New York, against United States Railroad 
Administration; New York Central Railroad (Wallkill 
Valley Railroad), Alleging Violations of the Full Crew Law 
(Section 54a Railroad Law) 

Case No. 6830 

(Public Service Commission, Second District, July 10, 1010) 

Railroads — section 54-a of the Railroad Law does not apply to a railroad of 
less than fifty miles in length under lease to a trunk line and operated 
as a branch to the main line. 

The New York Central railroad is the lessee of the Wallkill Valley 
railroad which it operates aa a branch from Kingston to Montgomery, 
a distance of about thirty-two miles. No trains are run from points on 
the Wallkill Valley road to points on the main line of the New York 
Central railroad beyond the terminal of the Wallkill Valley road or 
conversely. Held, that the Wallkill Valley railroad is a railroad less 
than fifty miles in length and that the "full crew law," section 54-a 
of the Railroad Law, does not apply to it. 



138 State Department Reports 



[Vol.20] Public Service Commission, Second District 



John Fitzgibbons in person, with Arthur B. Lanphier, for 
complainant. 

Visscher, Whalen & Austin (by Robert E. Whalen), for 
respondent. 

By the Commission. — Section 54a of the Railroad Law pro- 
vides that "no * * * corporation, * * * shall run or operate, 
* * * outside of the yard limits, on any railroad of more than 
fifty miles in length * * * a freight train of more than twenty- 
five cars," except with a certain prescribed crew, and also pro- 
hibits operation on any railroad of more than fifty miles in 
length any train (other than a freight train) of five cars or more 
without a crew of not less than one engineer, one fireman, one 
conductor and two brakemen. 

The respondent has been operating the trains complained of 
herein over what is known as its Wallkill Valley branch, formerly 
Wallkill Valley railroad, with crews smaller than those above 
prescribed. The railroad in question is controlled by the New 
York Central Railroad Company and operated as one of its 
branches. The New York Central railroad is much more than 
fifty miles in length, and the Wallkill branch referred to is much 
less than the length mentioned. It is operated as a branch from 
its junction with the main line at Kingston, N. Y., to Mont- 
gomery, a distance of thirty-two and a fraction miles. None of 
the trains continue beyond Kingston on the main line, but some 
of them continue in the other direction about four miles beyond 
Montgomery on the Erie railroad to a point known as Campbell 
Hall. The distance the trains are operated therefore is at the 
utmost less than thirty-seven miles. The Full Crew Law is sec- 
tion 54a of article 3 of the Railroad Law, and article 3 has for 
its title " construction, operation and management." That seems 
to have physical rather than corporate considerations in view. 
From the fact that the statute does not apply to freight trains 
under a certain length even on roads exceeding fifty miles in 
length, it may well be that the Legislature felt safe in assuming 
that freight trains separately operated on roads or branches less 



Fitzgibbons v. United States R R. Administration 139 
Public Service Commission, Second District [Vol.20] 

than fifty miles in length would be of 6uch moderate size that they 
also could safely be made an exception. This seems borne out by 
the fact that the largest train alleged in the complaint to have 
been operated contained thirty-six cars, and the trains generally 
contain from fifteen to thirty cars. 

In Chicago, R I. & P. Ry. Co. v. State, 111 S. W. Rep. 456, 
the Supreme Court of Arkansas held that a branch railroad under 
fifty miles in length has the rights of a railroad under fifty miles 
in length if operated as a branch ; in other words, that the statute 
there being construed applied to the operation rather than to the 
ownership, and that to hold otherwise would be to establish a 
classification contrary to the true intent and meaning of the law. 

It would seem reasonable to assume that the Legislature felt 
that the operation of the largest train which would be likely to be 
required on a branch of less than fifty miles in length was fully 
as easy and as safe to operate as a train of twenty-five cars having 
a much longer run on a main line. We think that was the intention 
of the Legislature, and it follows that the complaint should be 
dismissed. 

All concur. 

Kellogg,, Commissioner. — I concur in the foregoing result. 

The Wallkill Valley Railroad Company has leased its line, 
thirty miles long, to the New York Central Railroad Company, 
for an annual rental of 3% per cent of its outstanding stocks and 
bonds. 

Between the two companies the relation of lessor and lessee 
exists as to this line, and as to it the title and ownership is entirely 
disunited from that of the connecting line of the New York 
Central railroad. 

The Wallkill Valley railroad is operated by the New York 
Central Railroad Company entirely distinct and separate from 
its connecting line. 

Neither as to its ownership nor as to its method of operation is 
the Wallkill Valley railroad a " railroad of more than fifty miles 
in length " within the provisions of the " full crew law." 



140 State Department Reports 

[VoL 20] Public Service Commission, Second District 

The fact that the Wallkill Valley is leased and operated by a 
railroad company which also operates a railroad of more than 
fifty miles in length does not, in my judgment, bring the former 
line within the provisions of the statute in question as long as 
the operation of the two lines is kept entirely distinct, and no 
trains are run from points on the Wallkill Valley to points on the 
main line of the New York Central beyond the terminal of the 
Wallkill Valley or conversely. 



In the Matter of the Complaint of Jacob H. Friedman of New 
. York City, against A. S. Burleson, Postmaster General, and 
New York Telephone Company, as to Discontinuance of 
Telephone Service; Alleged Overcharges 

Case No. 6869 

(Public Service Commission, Second District, July 10, 1010) 

Telephone companies — dispute as to toll charges — discontinuance of service. 

Where there is a dispute as to toll charges and the telephone company 
makes reasonable efforts to adjust the difference without success, it is 
warranted in discontinuing the service. Complainant should have paid 
charges under protest. 

Jacob H. Friedman, complainant, in person. 
FranMand Briggs, for the respondent. 

Fbnnbll, Commissioner. — The complainant, a grain broker, 
refused to pay for two toll charges, one October 17, 1918, amount- 
ing to $1.25, 'and the other October 28, 1918, amounting to $2.05. 
Continued refusal to pay these charges resulted in the respondent 
discontinuing outgoing service on complainant's line on May 9, 
1919. 

At the hearing complainant testified that as to the toll call of 
October seventeenth, the operator stated she would throw off " two 
minutes for bad connection." This is flatly denied and the record 
slip made by the operator who handled the call does not show any- 
thing to indicate that there was such action on her part 



Fbiedman v. Burleson 141 

Public Service Commission, Second District [VoL20] 

The complainant produced a portion of an envelope on which 
he had made a memorandum regarding the " two number " call 
to Philadelphia, No. 1320 Poplar, on October twenty-eighth. The 
memorandum was made by him while the call was being put 
through. His memorandum shows that the first connection was 
made at 12 :21 p. m. ; that something interrupted ; that &t 12 :27 
the operator said to him " hang up and we will call you back ;" 
that at 12 :29 he got the connection and that at 12:33 the conversa- 
tion was finished. The toll slip, with the dials and times stamped 
on the back by the calculagraph, shows that the first connection 
was made at 12:21; that an interruption of some character oc- 
curred and a green pencil was drawn through the first set of 
dials; that a new set were stamped on at 12:23, and that the 
conversation concluded at 12 :33. 

A two-number call between New York and Philadelphia is 
handled in the following manner. The operator takes his number 
and the Philadelphia number and plugs directly into a trunk 
which drops in front of the Philadelphia two-number operator. 
The New York exchange operator passes the information which 
has been received from the subscriber as to number calling and 
number called. This being fast work no record is made of the 
time by the New York operator, and the subscriber keeps his re- 
ceiver off the hook while the operator is passing the number. 
The outward long distance operator at New York depresses an 
order circuit button which gives her the long distance inward 
operator at Philadelphia. She tells the long distance inward 
operator at Philadelphia the number she wants. The Phila- 
delphia operator gives her a trunk number and the New York 
operator plugs into that trunk number at the same time the 
Philadelphia operator plugs into the line of the local Philadelphia 
number. This gives the connection straight through from the New 
York outward number to the Philadelphia inward number through 
the Philadelphia exchange. On a two-number call, as soon as 
the number wanted answers, the toll ticket is put into a calcula- 
graph and stamped .with a dial. As soon as the one calling speaks 
and gets a reply from some one at the number called the ticket 



142 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

is stamped " on " and the arrows commence to move around the 
dials. As soon as the conversation finishes two disconnections 
appear, one from each end, and the Philadelphia operator, by 
moving a lever, causes another impression to be made by the cal- 
culagraph, stamping the position to which the various arrows 
have moved on the dials. This gives the ticket which shows how 
far the arrows have moved from zero. 

Comparing the complainant's memorandum with the toll ticket, 
both made at the time, we find a very remarkable coincidence 
as to details except the one variance* — complainant's memoran- 
dum showing that at 12 :23 he was told that he would be called 
later and that at 12 :29 the connection was resumed, whereas the 
toll ticket shows the calculagraph started to operate the second time 
at 12:23 and continued uninterruptedly until 12:33. The mem- 
orandum and the toll ticket each show that the call started, was 
disconnected, again started and concluded and all the times agree 
except the time as to when conversation started the second time. 
It would seem that the care and accuracy with which complainant 
made his memorandum would entitle that memorandum to at 
least the same credit in these peculiar circumstances as the mem- 
orandum made by the operator at the time. The necessity for 
telephone service being an urgent matter with the complainant, 
he being a grain broker, the sitting Commissioner decided at the 
close of the hearing that the charge for October seventeenth should 
stand as made, that an adjustment of six minutes in favor of com- 
plainant be made as to the toll charge of October twenty-eighth 
and, on payment of the bills as thus adjusted, service should be 
restored. 

The letters of the local managers show that the respondent made 
reasonable efforts to bring about some sort of a settlement without 
shutting off service and that the respondent was warranted in 
finally shutting off same. Complainant should have paid the bill, 
under protest, had his service continued, and fought out the merits 
of the charge in the meantime. 

All concur. 



Complaints against Central Hudson Gas & El. Co. 143 



Public Service Commission, Second District [Vol. 20] 



In the Matter of the Complaint, under Sections 71 and 72 of the 
Public Service Commissions Law, of Consumers of Gas in the 
City of Newburgh, against Central Hudson Gas and Elec- 
tric Company, as to Increase in Price Charged for Gas. Also 
Complaint of the Company (in its Answer) Asking That the 
Increased Price be Sustained 

Case No. 6398 

In the Matter of the Complaint, under Sections 71 and 72 of the 
Public Service Commissions Law of Purchasers of Gas in the 
City of Xewburgh, against Central Hudson Gas and Elec- 
tric Company, as to Former Price Charged for Gas; Increase 
in Price for Gas; and as to "Illuminating Power, Purity or 
Pressure" of Gas Furnished. Also Complaint of the Company 
(in its Answer) Asking That the Increased Price be Sustained 

Case No. 6402 

In the Matter of the Complaint, under Sections 71 and 72 of 
the Public Service Commissions Law of Purchasers of Gas 
in the City of Poughkeepsie, against Central Hudson Gas 
and Electric Company, as to Inere-K-e in Price of Gas; and 
as to Former Price. Also Complaint of the Company (in its 
Answer) Asking That the Increased Price be Sustained 

Case No. 6408 

(Public Service Commission, Second District, July 15, 1919) 

Oat companies — return of 7 per cent on investment reasonable — increase of 
rate to consumers from one dollar and twenty-five cents to one dollar 
and fifty cents per 1,000 cubic feet sustained. 

On March 1, 1918, the company increased its rates for gas from one 
dollar and twenty-five cents to one dollar and fifty cents per 1,000 cubic 
feet. For the past five years the average return upon the investment in 
the gas department has been slightly under 6 per cent. During the ten 
months operation under the new rate in the year 1918, a return of 6.13 
per cent is shown. It is not probable that the return for 1919 will 
exceed 7 per cent. Held, that while during the war the Commission was 
inclined to permit increases only so far as to meet operating expenses, 



144 State Department Reports 

[Vol.20] Public Service Commission, Second District 

taxes and interest on bonds, the time has now come when the Commission 
will consider a fair return on the investment, and that a return of 
7 per cent is not unduly large. Complaint dismissed. 

D. W. Wilbur and Thomas IVArcy, for complainants. 

Henry Wilson, as city manager of the city of Newburgh. 

Gould & Wilkie (by Mason H. Bigelow), for the respondent. 

T. R. Beal, as president of respondent. 

Ibvine, Commissioner. — The titles of these cases sufficiently 
indicate their nature. The respondent, by tariffs issued to become 
effective March 1, 1918, made certain changes in its rather com- 
plicated rates for gas in the cities of Newburgh and Poughkeepsie 
which constitute practically its field of operations. The rate for 
ordinary consumers was increased from one dollar and twenty-five 
cents to one dollar and fifty cents per 1,000 cubic feet. It is 
this rate which the complaints attack. Hearings were begun in 
June", 1918. The Newburgh complaints were signed by about 
1,000 individuals, of whom only one appeared at the hearing and 
the evidence by him offered consisted of tables showing rates for 
gas in various other communities. The Poughkeepsie case was 
vigorously contested. The cases were not finally submitted for 
decision for several months. The evidence was taken, as will be 
noticed, at the critical period of the war and the Commission was 
reluctant to determine a rate on evidence relating to conditions 
tot that time. Furthermore the representatives of the complainants 
in Poughkeepsie desired that the investigation include the elec- 
trical operations of the company on the theory that the price of gas 
should not be increased even if the gas operations should be found 
unprofitable provided the company as a whole was earning a fair 
return. The sitting Commissioner declined to receive such evi- 
dence on the ground that the two branches of the business must be 
considered separately and that the electric consumers could not be 
required to make up a loss on the gas business. Doubt was, 
however, felt upon this point and a case was pending demanding 
its judicial determination. This case was decided in accordance 



Complaints against Central Hudson Gas & El. Co. 145 

Public Service Commission, Second District [Vol.20] 



hi 



with the theory expressed by the sitting Commissioner January 
17, 1919. Municipal Gas Company v. Public Service Commis- 
sion, 225 N. Y. 89. So much time had then elapsed that it was 
thought that conditions might have changed so as to require further 
evidence. The parties were consulted and after considerable delay 
the Commission was informed by each side that it did not desire 
to make further proof. The representative of Poughkeepsie, how- 
ever, stated that he desired an inquiry into the reasonableness of 
the electric rates so that both matters might be determined at the 
same time. He was informed that there was no complaint pending 
but that if one were filed as provided by statute the two matters 
would be disposed of at the same time. No such complaint has 
yet been filed, so that we shall proceed to determine the gas cases 
on the evidence presented at the hearing together with such in- 
formation as is furnished by the 1918 report of the company of 
which the Commission takes notice. 

While the corporation in its evidence undertook to segregate 
in all respects its operations in Newburgh from those in Pough- 
keepsie the apportionment of certain operating expenses was 
necessarily somewhat artificial. It was conceded that the situa- 
tions in the two cities are so nearly alike that there should prop- 
erly be no difference in rates. This is borne out by a few figures: 

Tangible fixed capital, Newburgh $566,307 91 

Tangible fixed capital, Poughkeepsie 804,275 28 

Ratio 70 per cent 

&as sales in 1918 report, Newburgh 137,799 M 

Gas sales in 1918 report, Poughkeepsie 188,481 M 

Ratio 72 per cent 

Other items which may be strictly allocated show similar ratios. 
It is, therefore, more satisfactory in handling the figures to take 
the company as a whole than to undertake an apportionment 
which in some instances would not be satisfactory and which could 
not affect the result. 

Investment. — There is in this case little trouble in fixing the 
Stat* Dkpt. Reft.— Vol. 20 10 



146 State Department Reports 



[Vol.20] Public Service Commission, Second District 



amount of investment for the purpose of basing the rates. At 
the time the present corporation was formed in 1911 by a con- 
solidation of previously existing corporations a close examination 
was made for the purpose of ascertaining the cost of the property. 
This was allocated between gas and electricity and between Xew- 
burgh and Poughkeepsie. With subsequent adjustments because 
of additions and retirements, the fixed capital stood at the time 
of the hearing at $1,582,858.23. No question seems to be raised 
as to that account. The allowance as the investment of floating 
capital is severely criticized and in part the criticism is well 
founded. According to the books the total floating capital amounts 
to $186,643.97. This includes certain certificates of deposit with 
interest amounting to $21,703,79. It is usual to allow as floating 
capital in addition to materials and supplies on hand cash assets 
equal to two months revenue. Two months revenue would be 
about $67,000. Cash on hand and accounts receivable amount 
to $67,345.11. It would appear, therefore, that the certificates 
of deposit should be excluded, leaving as properly to be considered 
floating capital $134,779.83 or a total investment in the gas 
department of $1,717,638.06. 

Income. — At the time of the hearings we had the actual income 
account for 1917 and for the first four months of 1918. The cor- 
poration undertook to build up a prospective income account for 
1918 by estimating the remaining eight months. We have now 
before us in the report of the company the actual income account 
for the entire year. The complainants criticized certain items 
of expense. The criticism is based upon what is claimed to be a 
gross disproportion between the cost of superintendence and labor 
and that for general officers and clerks, commercial administration 
and promotion expense. Superintendence and labor cost in 1917 
amounted to $14,761,13 while the other group amounted to $60,- 
566.15 of which $28,419.82 was for general officers and clerks. 
This calculation makes no allowance for labor on repairs amount- 
ing to many thousands of dollars. Wages of meter readers and 
collectors are in the item of $28,419.82 for general officers and 
clerks. The labor cost in the manufacture of water gas is com- 



Complaints against Central Hudson Gas & El. Co. 147 



Public Service Commission, Second District 



[Vol. 20] 



paratively slight. We do not feel justified in scaling down the 
actual expense as being unreasonably high. 

There was much evidence concerning prices paid for coal. 
There is no evidence that anything more than the market price 
was paid. In fact the evidence is to the contrary. Comparison 
has been made from reports on file with the Commission of the 
cost of coal in 1917 to the larger companies making water gas. 
The average cost to eleven of these companies was five dollars and 
ninety-two cents per ton. The average cost in Poughkeepsie was 
five dollars and fifty-three cents per ton. 

It is interesting to compare the operating expenses of 1917 and 
1918 and also to compare the actual results for the year 1918 
with the estimate based on four months actual experience and 
presented on behalf of the corporation. The following table 
presents these figures: 



■ 


1917 


1918 


Company's 

estimates 

increase 


Actual 
increase 


Warki superintendence and labor. 
Boiler fuel 


$14,761 13 

4,218 55 

0,971 25 

36,930 95 

• 75,268 77 
3,982 93 

29,882 70 

32.146 33 

39,887 44 

7,644 73 
32,339 72 

9.809 24 


$22,036 13 

7,029 22 

10.643 43 

56,049 63 

102.747 45 
12,345 77 

28,721 20 

25,367 28 

87,341 37 

8,272 76 
33,028 14 

8,018 92 


$3,072 00 


$7,275 00 
2,810 67 


Steam purchased 


3,672 18 


Oenwator fuel . . . . 


7.212 00 

30.212 00 

6.000 00 


19.111 68 




27.478 68 


Other production expenses 

Transmission and distribution 
expenses 


8,362 84 
•1,161 60 


Commercial expenses 




•6,779 05 






•2,546 07 




1,000 00 


628 08 


General amortisation 


10,688 42 


Other general and miscellaneous 
expenses ........ ... 




•1,790 82 


Increases not specifically assigned, 
estimated aa wages increases 
and war risk insurance 


•8,763 00 












Total operating expenses 


$283,843 74 

16,847 28 
716 76 


$351,601 30 

25,044 36 
1,014 37 


$55,259 00 
7,361 00 


$67,757 66 
8,197 08 


Uncollectible bilk 










Total revenue deductions 


$301,407 78 


$377,660 03 


$62,620 00 


$76,252 25 



It will be observed that there was charged to general amortiza- 
tion in 1918, $10,688.42 more than in 1917. This charge is 



148 State Department Reports 

[Vol.20] Public Service Commission, Second District 

not accounted for. It may further be noticed that there was an 
actual increase in the cost of generator coal of $19,118.68 whereas 
at the time of the hearings the company estimated an increase of 
only $7,212. There was no material difference in the amount of 
gas manufactured in the two years. A great deal more coal was 
used in 1918 than in 1917 and this difference accounts for nearly 
all of the difference between the corporation's estimated and the 
actual result. There was considerable increase in the cost of oil 
because in 1917 oil was obtained under an existing contract and 
the average cost was only six and one-tenth cents per gallon. The 
price in 1918 was very much higher. 

The income account for the two years may be thus summarized : 

1917 1918 

Operating revenues $403,920 19 $472,259 19 

Total revenue deductions 301,407 78 377,660 03 

$102,513 41 $94,599 16 

Return on investment of $1,717,- 

638.06 5.97 per cent 5.51 per cent 

The 1918 figures reflect ten months of operation under the 
new rates. If we reduce the general amortization to the 1917 
figure the expenses are thereby reduced by the amount of $10,- 
688.42 with a corresponding increase in income and a return of 
6.13 per cent. The average return for the past five years has been 
something under 6 per cent. 

Conclusions. — An estimate of operating results for 1919 involves 
too many elements of conjecture to render it of much service. 
There is nothing to indicate a substantial addition to revenue. 
It is to be hoped and only hoped that expenses may decrease. 
It is not probable that the return can exceed 7 per cent. During 
the war the Commission was inclined, when rate adjustments 
became necessary, to permit increases only far enough to meet 
operating expenses, taxes and interest on bonds or, in other words, 
merely to insure solvency. The time has now come when we may 
properly consider a fair peace-time return on the investment. It 
is necessary to do so if utilities are to be preserved and capital 



City of Jamestown v. Wakben & Jamestown St. R. Co. 149 



Public Service Commission, Second District [Vol.20] 

invited in order to make extensions and betterments essential to 
the rendition of proper service. A return of 7 per cent or less 
cannot be considered an unduly large return. It may be that coal 
prices and oil prices, and perhaps some other elements of cost, 
will soon decrease to such an extent as to warrant a lower rate. 
On the figures before us we cannot hold that the present rate is 
at the present time unreasonably high and the complaint must, 
therefore, be dismissed, but the current schedule should not be 
fixed for a period longer than one year. It is true that the cor- 
poration has been paying dividends during the two years under 
special examination of 8 per cent per annum and that in 1918 
the corporate surplus was increased by the amount of $5,524.82. 
This indicates higher earnings on the electrical side than on the 
gas side but, for reasons already stated, the electrical operations 
are not before. the Commission and, therefore, no opinion is ex- 
pressed or even entertained as to the reasonableness of the electric 
raxes. 

All concur. 



In the Matter of the Complaint of the City of Jamestown against 
Wabben and Jamestown Street Railway Company and 
Jamestown Street Railway Company, as to Proposed Dis- 
continuance of Issuance of Transfers between the Railways of 

Said Companies ~ ^ T -_,- 

r Case No. 6810 

In the Matter of the Petition of Jamestown Street Railway 
Company, under Subdivision 1, Section 49, Public Service 
Commissions Law, and Section 181, Railroad Law, for Per- 
mission to Increase Passenger Pare in the City of Jamestown; 
Also as to Filing Passenger Tariff on S.hort Notice 

Case No. 6899 

(Public Service Commission, Second District, July 15, 1919) 

Street railways — increase of fare allowed. 

The Warren and Jamestown Company is restricted by its franchise to 
a five cent fare and transfers. The Jamestown Company is not so 



150 State Department Reports 

[Vol.20] Public Service Commission, Second District 

restricted. Both companies need additional revenue and have agreed 
as to transfers. Held, that the Jamestown Company is authorized to 
charge a seven cent cash fare between any two points within the city 
and to sell twenty ride coupon tickets for one dollar, and ten ride 
coupon tickets for fifty cents, and to transfer to the Warren and James- 
town Company to any point reached by its lines within the city and to 
accept transfers from the Warren and Jamestown Company to any point 
within the city. 

Ernest Cawcrof t, corporation counsel, for the city of Jamestown. 

Marion H. Fisher, attorney, and A. N. Broadhead, president, 
for the Jamestown Street Railway Company. 

Robert Jackson, attorney, and Hugh A. Siggins, general mana- 
ger, for the Warren and Jamestown Street Railway Company. 

Fennell, Commissioner. — Number 6810 is a complaint of 
the city of Jamestown against the Jamestown Street Railway 
Company and the Warren and Jamestown Street Railway Com- 
pany because of the proposed discontinuance of interchange of 
transfers. 

Number 6899 is a petition by the Jamestown Street Railway 
Company to increase trolley fares in the city of Jamestown. 

For brevity the companies will be designated herein as " James- 
town " and " Warren and Jomestown." 

The Warren and Jamestown Company has a franchise five 
cent fare restriction coupled with an agreement to give transfers. 
The Jamestown Company is not so restricted. 

The Jamestown Company, claiming it could not afford to carry 
transfer passengers at its proportionate share of the five cent fare, 
notified the Warren and Jamestown Company that it would cease 
to accept such transfers. The transfer arrangement has been 
continued pending negotiations between the city and the James- 
town Company regarding a proposed increase in the city fare. 

Conferences have been held by the representatives of the railway 
companies and the city officials, some of which conferences were 
attended by Mr. Barnes, chief of the division of street railways 
of the Public Service Commission. 



City of Jamestown v. Wareen & Jamestown St. R. Co. 151 



Public Service Commission, Second District [Vol.20] 



The final outcome of the conferences was a tentative agreement 
that the city would not require the Jamestown Company to go 
into a valuation rate case if transfers were continued and ticket 
books could be bought at a five cent rate, and provided the Public 
Service Commission found that the Jamestown Street Railway 
was entitled to the increase. 

At the close of the hearing on July 7, 1919, the Commissioner 
who held the hearing, upon the consent and with the approval of 
all the parties in interest, dictated the following: 

" It is agreed in open session before the Commission by the 
representatives of the two street railway companies and the repre- 
sentatives of the city that in the negotiations heretofore had 
between the representatives of the street railway companies and 
the representatives of the city, the street railway company 
insisting upon eighteen tickets for a dollar, the representatives of 
the city on twenty tickets for a dollar, it was finally concluded 
and agreed between them that if an increase in cash fare was 
allowed it should be seven cents in consideration of fixing on a 
rate of ten tickets for fifty cents or twenty tickets for a dollar. 

" That if a five-cent ticket rate is adopted the Jamestown and 
Warren Street Railway Company will sell ticket books, as well as 
the Jamestown Street Railway Company, for use in the city on 
the city lines, transfers will be exchanged and three cents of each 
five-cent ticket will go to the Jamestown Street Railway Company 
and two cents to the Jamestown and Warren Street Railway 
Company. If a city cash fare is paid on the Jamestown and 
Warren railroad, it being limited to five cents because of the 
franchise restriction, the Jamestown Street Railway Company 
will accept the transportation of that passenger at the same rate, 
three cents to the Jamestown Street Railway Company and two 
cents to the Warren and Jamestown Street Railway Company. 
If an increased fare is granted, and the passenger is a cash 
passenger and boards a car of the Jamestown Street Railway 
Company and transfers to the Warren and Jamestown Street 
Railway Company, the proportion or share of the Jamestown and 
Warren Street Railway Company shall remain at two cents, and 



152 



State Department Kepobts 



[VoL 20] 



Public Service Commission, Second District 



whatever the increase may be it will be added to the Jamestown 
Street Railway Company's share. 

" It is further agreed that the foregoing transfer arrangements 
and division of rates shall continue while the rates remain as fixed 
in this proceeding." 

It also was conceded on the hearing that the various conferences 
and the newspaper accounts thereof had given so much publicity 
that short notice would not be objected to. 

Following are tabulations, made up from the company's reports, 
showing the need of additional revenue. There is also an estimate 
showing the expected gain from the proposed increase; 

Statistics of Electric Railroad Operations 



Number of revenue passengers 

Number of transfer passengers 

Number of free passengers 

Total number all passengers 

Number of car-miles 

Number of ear-hours 

Average revenue per car-mile 

Average revenue per car-hour 

Average expenses per" car-mile 

Average expenses per car-hour 

Operating ratio (operating expenses to operating revenues) . 

Ratio of transfer to revenue passengers 

Average revenue per passenger (total rev. trans., total pass.) 

Average passengers per car-mile 

Average passengers per car-hour 



Year ended 


Year ended 


June 30, 


December 


1910 


81, 1918 


4,948,666 


5,115.167 


1,196,630 


1.361,157 


89,994 


221,497 


6.235.180 


6,697,811 


783,838 


929.321 


109,549 


122,276 


26.2* 


47.9* 


81.88 


83.64 


16.9* 
$1.21 


45.1* 
83.43 


64.4% 
24.2% 


94.1% 


26.7% 


2.97* 


3.7t* 


8.0 


7.2 


57.0 


54.8 



City of Jamestown t*. Warbex & Jamestown St. R. Co. 153 



Public Service Commission, Second District 



[Vol. 20] 



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154 



State Department Reports 



[Vol. 20] 



Public Service Commission, Second District 



Comparative Balance Sheet June 30, 1910, and 

December 31, 1918. 



Assets: 
Total fixed capital. 



Current assets: 

Materials and supplies 

Cash 

Bills and notes receivable, miscellaneous. 
Accounts receivable, system corporations. 

Accounts receivable, miscellaneous 

Miscellaneous current assets , 



Total current assets 

Construction work in progress. 
Corporate deficit 



Totals. 



Liabilities: 

Total stock 

Total long term debt. 



Current liabilities: 

Loans and notes payable, miscellaneous. 
Accounts payable, miscellaneous , 



Total current liabilities 

Accrued amortisation of capital. 
Corporate surplus , 



Totals. 



Year ended 

June 30. 

1910 



$747,202.99 



$21,044 38 

156 19 

1,463 00 



469.579 97 
132.871 09 



$625,114 63 
78,146 16 



$1,450,463 78 



$250,000 00 
300.000 00 



$240,653 52 
524,087 98 



$764,741 50 

858 16 

134,864 12 



$1,450,463 78 



Year ended 

December 31, 

1918 



$1,201,376 68 



$1,070 68 

302 00 

1.508 61 

450,619 92 

429,926 16 

28.783 40 



$910,838 09 

38,075 56 

303,463 74 



$2,455,128 75 



$250,000 00 
300,000 00 



$336,469 66 
1,328,075 41 



$1,664,545 07 
240.581 68 



$2,455,126 75 



Jamestown Street Railway Company 

Statement of Estimated Passengers Carried and Estimated 
Revenue Resulting from Increase in Passenger Fares; 7 Cents 
Cash Fare; 20 Tickets $1 ; 10 Tickets 50 Cents; Year Ended 
December 31, 1918. 

number of passenger fares collected 



South side loop 
North side loop 

Falconer 

Lakewood 

Celoron 

Newland 

Willard 



Five cents 


Other 


Totals 


a 


b 


« 


285.384 


88.423 


373,807 


484,739 


122,455 


607,194 


1,237,349 


471,728 


1.709,077 


588,738 


245,623 


834.361 


561,823 


133,841 


695,664 


365,848 


91,242 


457,090 


372,724 


65,240 


437,964 


3.896,605 


1,218,552 


6.115,157 



City of Jamestown v. Waeren & Jamestown St. R. Co. 155 



Public Service Commission, Second District 



[Vol. 20] 



ESTIMATED NUMBER OF PASSENGERS PER YEAR 



Estimated number 

of passengers at 

seven cents 


Per cent 
decrease 


Estimated number of 
ticket fares 


Estimated number of 

passengers carried, 

totals 


i 

88,400 
122,500 
471 . 700 


25.0 
15.0 


176.200 
412,000 
1,237,300 
688.700 
661,800 
310,000 
335.600 


9 264.600 

534.500 

1,70'). 000 


245,600 




834. 3fK) 


133,800 




605,000 


91,200 
65.200 


15.0 
10.0 


402,100 
400.700 


1,218,400 




3.622,400 


4.840,800 









Estimated passenger menus per year, baaed on estimated passengers carried at per column* d and 

and revised rates as per heading 



1.218.400 passenger fares @ 7*. . . $85,288 
3,622,400 passenger fares @ &i . . . 181 . 120 



Total estimated passenger revenue $266,408 
revenue 1918 249,971 



Increase in estimated passenger 
revenue $16,437 



Passengers carried 1918 (col. c) . . . 5, 115 , 157 

Passengers estimated 1919 (col. g) 4,840,800 

Decrease passengers carried (com- 
pared with 1918) 274,357 

Per cent of estimated decrease. . . 5. 36% 



The need of additional revenue is apparent from the above 
figures. The first and second quarters of 1919 show the deficit to 
be decreasing but not to have disappeared. 

Net deficit 1918 1919 

First quarter $13,582 36 $7,583 82 

Second quarter 10,937 13 1,763 71 



The figures for the second quarter are from a preliminary 
report from the company's auditor and are subject to possible 
modification. 

The necessity for the increase being shown and the transfer 
privilege being continued, the Jamestown Street Railway Company 
should be permitted to put its proposed schedule of rates into 
effect and may do so on three days' notice. 

An order has been made accordingly. 

All concur. 

In accordance with the foregoing opinion, the Commission on 
the same day made the following order : 



156 State Department Reports 

[Vol.20] Public Service Commission, Second District 

By the Commission. — On the facts found and for the reasons 
stated in the accompanying opinion, it is 

Ordered: 1. That the Jamestown Street Railway Company 
be and hereby is authorized to charge a cash fare of seven cents 
for transportation of passengers over its lines between any two 
points within the city of Jamestown, and to sell twenty-ride 
coupon tickets, each coupon of face value seven cents, for one 
dollar, and ten-ride coupon tickets, each coupon of face value 
seven cents, for fifty cents, and to give to any passenger paying 
such cash fare or presenting such a coupon ticket a transfer to 
the Warren and Jamestown Street Railway good to any point 
reached by the lines of said Warren and Jamestown Street Rail- 
way Company within the city of Jamestown, the said Jamestown 
Street Railway Company also to accept transfers issued by the 
Warren and Jamestown Street Railway Company for passage to 
any point on its lines in the city of Jamestown. 

Ordered: 2. That the Jamestown Street Railway Company 
be and hereby is authorized to file, on not less than three days' 
notice to the public and the Commission, a passenger tariff super- 
seding its passenger tariff ,P. S. C. — 2 N. Y. — No. 1 and effective 
supplement thereto, and provide therein the new cash and ticket 
fares herein approved and also providing fares and charges to 
apply between other points reached by its lines which will bear 
the same relationship to the Jamestown city fares herein author- 
ized as its said fares and charges currently in effect bear to its 
present Jamestown city fares. 

Ordered: 3. That the Jamestown Street Railway Company 
shall continue in force and effect the rates and charges specified 
in this order until the further order of the Commission. 



Practice of United States Railboad Administration 157 



Public Service Commission, Second District [Vol.20] 



In the Matter of Practice of United States Railroad Admin- 
istration — Boston and Maine Railroad — with Respect 
to Employees in Charge of Locomotives (under Steam) which 
are Being Towed by Another Locomotive Alone or in a Train 

Case No. 6865 

(Public Service Commission, Second District, July 24, 1919) 

Railroads — maiming of engines towed under steam. 

Complaint is made against the company for permitting engines to be 
towed under steam manned only by a fireman. Held, that such engines 
shall be manned by an engineer or a fireman of at least one year's actual 
service aa such who has passed proper and sufficient examinations and 
tests as to his competency. 

William F. Fitzsimmons, for Brotherhood of Locomotive 
Engineers. 

Jarvis P. O'Brien, for the United States Railnoad Adminis- 
tration, Boston and Maine Railroad. 

Visscher, Whalen & Austin (by Mr. Whalen), for The New 
York Central Railroad Company. 

Kbllogg, Commissioner. — This matter comes to the atten- 
tion of this Commission upon a letter signed by W. C. Whish, 
legislative representative of the Brotherhood of Locomotive 
Engineers. 

This letter is in the nature of a complaint against the Boston 
and Maine Railroad for permitting engines to be towed under 
steam manned only by a fireman. In certain features of the 
complaint, it seems to be limited to the placing of an " inex- 
perienced" fireman in control of such an engine, but the general 
allegations of the letter and the subsequent attitude of the com- 
plainant upon the hearing indicated that the complaint is broad 
enough to be deemed a protest against the placing of any fireman in 



158 Stats Department Reports 

[Vol. 20] Public Service Commission, Second District 

the control of an engine thus being towed, and a demand that such 
engine be manned by an engineer. 

The practice as it now exists upon said railroad is to dispense 
with the services of an engineer upon a locomotive when being 
towed under steam, and to place the same in the care of a fireman 
only. The officials assert that caution is used in the selection of 
such fireman, that he be competent to properly discharge the 
duties arising in the situation. 

Certain of these duties are those of an engineer rather than 
those of a fireman. The supply of water to the boilers must be 
attended to, the feeding of the lubricants must be constant, the 
air brake system must be kept in such condition as not to coun- 
teract the efforts of the engineer upon the towing engine to stop 
the train at any time, and the person in charge should have suf- 
ficient acquaintance with the machinery and running gear of an 
engine to quickly detect any defect developing therein and to see 
that proper means are taken to avoid danger should such defect 
arise. 

Instances Jiave been called to the attention of the Commission 
where persons in charge of engines thus being transported, 
either through gross stupidity or the most culpable carelessness, 
ignored the plainest demands of prudence in connection with the 
care of their engine, showing an utter absence of all sense of the 
grave responsibility of the position in which they were placed. 
No serious accidents on this account have been called to the 
attention of the Commission, but on several occasions the danger 
line has been too closely approached. 

Upon this railroad a fireman is required to serve a period of 
four years before he is elevated to the rank of engineer, and after 
he is elevated to such rank, he must run his engines a substantial 
number of miles before he is permitted to operate an engine on 
through passenger trains. In this regard the company is to be 
highly commended for requiring extended preparation before 
permitting an employee to operate an engine, thus being careful 
to safeguard not only its employees, but also the persons and 
property intrusted to its care. 



Practice of United States Railroad Administration 159 

Public Service Commission, Second District [Vol.20] 

• 

It becomes an object to the fireman not only to properly dis- 
charge the duties peculiar to that employment, but also to qualify 
himself by observation and by receiving instruction to eventually 
rise to the rank of engineer, and while performing the duties of a 
fireman he becomes qualified, if he is efficient, to afterward dis- 
charge the responsibilities of the more important position. 

The duties above enumerated which must be discharged by a 
person in control of an engine being towed under steam are the 
duties ordinarily performed by an engineer, but they are the ele- 
mental duties of that position, and ones which a fireman early 
in his acquisition of knowledge of the engine ought to acquire, 
and be able to perforin if possessing ordinary intelligence and 
sensing in a moderate degree the responsibility of his position. 

A fireman after a year of actual service ought to be sufficiently 
informed to be safely intrusted with the operation of an engine 
under such conditions if capable and alert. But it would seem 
that the selection of a fireman to perform these duties, in view 
of the experience which has been encountered, ought not to be 
left to the fireman, but his availability should be determined by 
prescribed examinations and tests and stand of record. 

From the foregoing, it would seem that it would be entirely 
safe to permit the control of an engine being towed under steam 
to be exercised by a fireman, after actual experience for one full 
year in the discharge of his duties, but only upon condition that 
he has passed proper examinations and tests as to his compe- 
tency and ability to discharge all of the duties incumbent upon a 
person placed in charge of such engine, said examinations to be 
held and tests conducted by the railroad company, and a record 
thereof kept, at all times accessible to this Commission and its 
representatives. 

All concur. 

In accordance with the foregoing opinion, the Commission on 
the same day made the following order : 

By the Commission. — It is ordered that in all cases where an 
engine is being towed under steam, it shall be in the control of an 



160 State Department Reports 



[Vol.20] Public Service Commission, Second District 

engineer, or of a fireman who has had at least 365 days' actual 
service as such, and who has passed proper and sufficient exami- 
nations and tests as to his competency and ability to discharge 
the duties incumbent upon an operative in control of an engine 
under such conditions ; said examinations to be held and tests to 
be conducted by the Railroad, and a record thereof kept, at all 
times accessible to this Commission and its representatives. 



In the Matter of the Petition of Walter J. Blevots, under the 
Transportation Corporations Law, for a Certificate of Public 
Convenience and Necessity for the Operation of a Stage Route 
by Auto Busses in the City of Glens Falls (it being also Pro- 
posed that the Route Shall be Operated to the Hamlet of Bolton 
Landing, Warren County) 

Case No. 6920 

(Public Service Commission, Second District, July 24, 1010) 

Stage line — certificate of convenience and necessity denied to competitor. 

Where an existing automobile stage line is so managed as to attract 
to its support the commendation of a large proportion of the people 
served by it and which was run at a slight loss during the year 1918, a 
certificate of convenience and necessity will be denied to a proposed 
competitor of the established line. 

James S. Kiley, for the applicant. 

Chambers & Finn (by Mr. Finn), for the Glens Falls-Bolton 
Auto Stage Line. 

James McPhillips and C. E. Fitzgerald, for the Hudson Valley 
Railway Company. 

Kellogg, Commissioner. — This is an application by Walter 
J. Blevins of Glens Falls, under chapter 667 of the Laws of 1915, 



Petition of Blevins 161 



Public Service Commission, Second District [Vol. 20] 

for a certificate of public convenience and necessity for a stage 
route to be operated by auto busses in the city of Glens Falls, 
the line to run from the Hotel Ruliff, a central point in said city, 
over Glen street to the city boundary, thence northerly to the 
hamlet of Bolton Landing, a distance of about twenty-two miles, 
passing through several settlements, including the incorporated 
village of Lake George, which is distant about nine miles northerly 
from Glens Falls. 

There is at present in operation over this entire route an auto- 
mobile stage line known as the Glens Falls-Bolton Stage Line 
Co., Inc. 

There is also connecting the village of Lake George and the 
city of Glens Falls, the Hudson Valley Railway Company, which 
operates fifteen cars per day each way, during the summer sea- 
son, and about half as many during the winter months. 

Lake George and Glens Falls are also connected by the Dela- 
ware and Hudson Company, which operates a steam railroad, 
and carries passengers between said communities. 

The northerly portion of the proposed route extends over a 
State highway skirting the westerly shores of Lake George be- 
tween Lake George village and Bolton Landing, and over the 
waters of this lake, during the summer season, there is main- 
tained a steamboat line which also to some extent affords facili- 
ties for transportation of passengers from and to points on its 
shores. 

The present stage line was incorporated May 21, 1910, and 
on November 8, 1913 it was granted a certificate of convenience 
and necessity by this Commission to operate the line in question. 
During late years it has conducted its service by the use of two 
busses with a seating capacity of sixteen passengers each. 

These are run on a schedule of five round trips a day during 
the months of July, August and September, and are run on a 
schedule of two round trips per day, except during the winter 
months when the weather prohibits their operation. This dura- 
tion of non-operation is of greater or less length depending upon 

the severity of the season and the corresponding road conditions. 
State Dept. Reft. — Vol. 20 11 



162 State Department Reports 



[Vol.20] Public Service Commission, Second District 



These busses are neat in appearance, and are kept in an at- 
tractive and clean condition. The management of the line and 
the service furnished by it has been so good as to attract to its 
support the commendation of a very large proportion of the 
people served by it, many of whom both by attendance at the 
hearing, and in signing a petition filed with this Commission, 
have protested against the issuance of a certificate permitting the 
operation of a competing line. 

In view of this somewhat unusual attitude on the part of the 
public, I feel that the operators of the present line have been 
most successful in meeting the public demands, and stand in a 
position of popularity seldom held by public service corpora- 
tions. 

The present line has submitted a statement of its receipts and 
disbursements for the eighteen months ending June 30, 1919. 
This period is shown by the evidence to have been as good if not 
better than any other period during the operation of the line. 

The two owners of the stock of the company, which is capital- 
ized at $5,000 and whose tangible assets have a value of $3,600, 
operate the busses. In making up their statement of cost of op- 
eration which they submitted, they allow themselves each $30 
per week for services in operating the conveyances during the 
period of actual operation. 

The accountant has also charged up $250 per annum for depre- 
ciation of each of the busses, which are inventoried at $1,650 
apiece. There is also a charge of $300 per annum for an item 
called "property damage and fire loss," $150 on each convey- . 
ance. This item, as I understand it, stands in lieu of insurance, 
which seems not to be carried by the line, and is no greater and is 
probably less than the premium on insurance policies protecting 
the company from casualty liability and fire losses would 
amount to. 

The depreciation of $250 a year on the auto busses, I think, is 
moderate, and I am also satisfied that the amount charged by the 
stockholders for their personal services, in view of the responsi- 
bility devolving upon them, and the long hours of work, is entirely 
reasonable. 



Petition of Blevinb 163 



Public Service Commission, Second District [Vol. 20] 



Making the allowances as suggested, the line was operated dur- 
ing the year of 1918 at a loss of $192.67, in actual operation. 
This makes no allowance for interest or other overhead charges. 
The only months during which a profit was shown were the months 
of July, August and September. During the other months the 
enterprise was conducted at a loss. During the six months of 
the current year, upon the same basis, there is shown a loss of 
$338.74, exclusive of interest charges. 

It is quite apparent, therefore, that if the resources of this 
company are to be depleted by competition to any appreciable 
extent, it will soon be compelled to go out of business, or at least 
very materially curtail its service. 

There is some evidence tending to show that at very infrequent 
periods there has been a crowding of the busses. This has hap- 
pened undoubtedly on some holidays and Sundays, but certainly 
there has not been evidence of this to a sufficient extent to author- 
ize the issuance of a certificate of convenience and necessity to a 
competing line. The crowding of all public utilities on such 
extraordinary occasions is matter of common knowledge and 
experience. 

The total capacity of present line as now operated without over- 
crowding is one hundred and fifty through passengers daily. The 
gross receipts therefrom would be about $120 per day, or about 
$3,600 per month. 

The most prosperous month in the history of the line as disr 
closed by the evidence was August, 1918, when the gross receipts 
were $1,428.54, or less than two-fifths of capacity of the existing 
line as now equipped and operated. 

From this also it appears conclusively that the demands of the 
public are more than provided for. 

Furthermore it should be borne in mind that if there were any 
reasonable demand for better accommodations the busses could be 
run more frequently and the present equipment could be added to. 

This Commission ought not to encourage a citizen to enter into 
competition of this kind by issuing to him a certificate of con- 
venience and necessity which, unless conditions very materially 



164 State Department Kepobts 



[Vol.20] Public Service Commission, Second District 

change, would only result in ultimate failure, not only to the 
existing line but to the new competitor. 

In this regard the case is very similar to others which have come 
within the purview of this Commission, where a bus line has been 
established and the business is sufficient to barely maintain it, and 
if competitive lines be permitted, disaster would fall upon both. 
As stated in Matter of the Petition of Buschini, 7 Pub. Serv. Com. 
Rep. (2d Dist) 301 (18 State Dept. Rep. 270) : "The danger 
is that the business being divided between two carriers will be 
profitable to neither, and that in the long run the equipment of 
both will wear out in unprofitable service and neither will be able 
to continue. The result would be that the public would not be 
able to get any permanent service whatever." 

In addition, on the southerly part of the line, including that 
part within the city of Glens Falls, over which alone our jurisdic- 
tion extends under the statute, there is a trolley railroad furnish- 
ing sufficient and frequent service, and also a steam railroad car- 
rying passengers at somewhat more infrequent and irregular 
intervals. 

The petition should be denied. 

Hill, Chairman, and Barhite and Fennell, Commissioners, con- 
cur; Irvine, Commissioner, dissents, in a memorandum. 

Ibvine, Commissioner (dissenting). — I would concur in this 
opinion if I thought the Commission had any authority in the 
matter. I do not think so and therefore dissent for the reasons 
trict 96 ; 7 State Dept. Rep. 242. The Legislature at one time 
stated in Matter of Petition of Bartholomew, 5 P. S. C. 2d Dis- 
conferred a certain measure of authority upon the Commission 
in such matters but such authority as was conferred was expressly 
revoked by Laws of 1915, chapter 667. I still believe that to use 
the power granted by the Legislature relating to city traffic alone, 
in order to regulate competition outside the city is a usurpation 
of authority. 



Petition of Mayor, etc., of Watertown 165 



Public Service Commission, Second District [Vol.20] 



In the Matter of the Petition of the Mayor and Common Council 
of the City of Watertown, under Section 91 of the Railroad 
Law, for an Order Determining that the Court Street Grade 
Crossing of the New York Central Eailroad in said City Shall 
be Changed to an Over-crossing 

Case No. 4965 

(Public Service Commission, Second District, August 19, 1919) 

Order of May 10, 1917 (13 State Dept. Rep. 184), modified by reason of coit 
of doing the work having increased fifty per cent. 

By the Commission. — On May 10, 1917, the Commission 
made an order determining the manner in which Court street 
grade crossing of the tracks of the New York Central railroad in 
the city of Watertown should be eliminated. 13 State Dept. 
Rep. 184. This order included a section having reference to a 
division of the cost of the work based on an understanding 
specifically referred to in the preamble to the order, which section 
reads as follows: "In accordance with the aforesaid understand- 
ing and resolution adopted by the city, the city of Watertown 
shall assume, pay, and discharge the entire cost of the lower deck 
of the bridge over the Black river. It shall further assume, pay, 
and discharge so much of the entire cost and expense of the con- 
struction and work necessary for the elimination of the grade 
crossing as herein authorized and provided for including the 
cost of any land, rights, or easements necessary or required for 
the purpose of carrying out the provisions of this order, and of 
any land or other damages whatsoever which may arise by virtue 
thereof as shall exceed the sum of $260,000, which last men- 
tioned sum is to be paid by the railroad company, the city of 
Watertown, and the State of New York, respectively, in such 
proportions as are fixed by statute in such cases made and pro- 
vided; this order being granted upon the express condition that 
no financial liability or obligation whatsoever in excess of one- 
half the sum of $260,000 shall attach to or fall upon the New 



166 State Department Reports 

[VoL 20] Public Service Commission, Second District 

York Central Railroad Company, and that no such financial 
liability or obligation in excess of one-fourth of said sum shall 
attach to or fall upon the State of New York on account of the 
acquisition of lands, rights, or easements necessary or required, 
the construction and work, or for any other incidental expenses 
herein authorized and provided for; and that no sum in excess 
of one-fourth of said $260,000 shall be payable or paid on account 
of the State's share of the cost of this elimination project out of 
any moneys which may have been or may be appropriated by the 
Legislature of the State of New York for the purpose either of 
the elimination of grade crossings or of the reconstruction of 
work at crossings either at grade or otherwise. 

" The acceptance of this order by the city of Watertown shall 
be deemed as an undertaking on its part to save the New York 
Central Railroad Company, the State of New York and this Com- 
mission harmless from all costs, expenses, claims, or demands 
whatsoever on account of this order and of any provisions thereof 
in excess of one-half and one-fourth of the sum of $260,000; the 
sums of $130,000 and $65,000 respectively, representing respec- 
tively one-half and one-fourth of the sum of $260,000, agreed 
upon by all parties in interest as the maximum cost, interest 
included, of the elimination project for the purposes of an 
accounting under the statute." 

On account of the state of war existing subsequent to April, 
1917, and the cessation of work of this character, detail plans 
and specifications were not filed for approval until May, 1919. 
Subsequent to approval by the Commission in June, 1919, the 
city called for bids, and on July 18, 1919, received proposals 
from three contractors for doing the work of construction, the 
lowest of which was $335,815.21. The amount heretofore agreed 
upon as the maximum cost of doing the work of construction was 
$232,400, which included $21,133 for engineering and super- 
intendence. The increase in the cost of doing the work is 
$124,548.21, which increase is due to the abnormal costs of mate- 
rial and labor now prevailing. 

On July 25, 1919, the city of Watertown filed a petition alleg- 
ing that by reason of the aforesaid provision of the order of this 



Petition of Mayor, etc., of Watertown 167 

Public Service Commission, Second District [Vol. 20] 

Commission, the city would be compelled to pay the difference 
between the cost of the elimination and the estimated cost of 
$295,000, or about $100,000; and further alleged that this was 
manifestly unjust and unfair and was not contemplated by any 
of the parties in interest at the time of making the order above 
referred to. 

On August 5, 1919, a hearing was held in Albany at which 
Isaac R. Breen, mayor, Harold L. Hooker, corporation counsel, 
and E. W. Sayles, city engineer, appeared for the city of Water- 
town ; and B. S. Voorhees, engineer of grade crossings, and Pur- 
cell, Cullen & Purcell (by Francis K. Purcell ), attorneys, for the 
New York Central railroad. The city contended that the 
increased cost of doing the work should be borne by the interested 
parties in accordance with- the provisions of the statute for the 
distribution of the cost of changing grade crossings, and that the 
heretofore agreed upon cost of constructing the lower deck should 
be increased in proportion as the total cost of doing the work had 
been increased. The railroad contended that there should be no 
increase in the cost to the railroad of doing the work, inasmuch 
as the above referred to order specifically limited the shares of 
the State and railroad. The railroad also contended that the 
detailed plans approved by the Commission included facilities 
in which the city alone was interested and which were not 
included in requirements laid down in the original order of the 
Commission above referred to; that these facilities were not 
essential to the elimination; and that the cost of constructing 
them was included in the proposals of contractors above referred 
to. These facilities include trolley posts, ballast for trolley track, 
extra pavement due to trolley track, lamp posts, extra stairways, 
additional filling and pavement occasioned by running out the 
grades beyond the points determined by the Commission's order, 
and additional sidewalks and curbs, the cost of which, based on 
the unit prices submitted by the lowest bidder, amount to about 
$20,000. 

The following is a statement of the probable cost of completing 
the elimination: 



168 State Department Reports 

[Vol. 20] Public Service Commission, Second District 

Contractor's bid for doing the work of construction . . $335,815 21 

First intermediate accounting (land, etc.) 57,412 91 

Engineering, 5 per cent of $335,815.21 16,790 76 

Contingencies, including interest, railroad and city 
expenses not included in above accounting, 

claims for land damages, etc. (estimated) 10,000 00 



$420,018 88 



As indicated above the original estimate of doing the work, 
less the engineering, was $211,267, which is $104,548 less than 
the lowest contractor's bid after deducting the estimated cost of 
$20,000 for additional facilities above refered to. Therefore, 
there has been an increase in the cost of doing the work of 50 
per cent. Ten per cent was allowed for engineering and super- 
intendence in compiling the original estimate; hence the cost of 
doing the work on the lower deck was $31,820, which, increased 
by 50 per cent, becomes $47,730, which amount represents the 
probable present cost of doing the work of constructing the lower 
deck. This amount, plus 5 per cent, or the present allowed 
engineering percentage, is $50,100, which deducted from the 
total cost estimated above, $420,000, less the additional facilities 
referred to, $20,000, leaves $349,900 as the probable cost of the 
elimination. 

The Commission is of the opinion that it would be unfair and 
unjust to insist that the city of Watertown bear all the expense 
of eliminating the aforesaid Court street crossing in excess of 
$260,000, as laid down in the aforesaid order. 

Ordered, (1) That the aforesaid sections of the order of this 
Commission dated May 10, 1917, be and the same are hereby 
rescinded. 

(2) That it is hereby determined that the cost of the lower 
deck of the bridge over the Black river shall be represented by 
$50,100, and that this amount shall be chargeable to and paid by 
the citv of Watertown. 

(3) That the probable total cost of all the work involved in 
the project of eliminating the Court street grade crossing as 



Petition of Mayob, etc., of Watertown 169 

Public Service Commission, Second District [Vol. 20] 

indicated on the detailed plans and specifications heretofore 
approved by the Commission, including all the work of construc- 
tion of both the upper and lower decks, arches, approaches, etc., 
land, rights, easements, claims for land damages, engineering and 
superintendence, interest, and any and all other items incidental 
to carrying out the order of the Commission in the above-entitled 
matter, is hereby determined to be $420,000. 

(4) That the cost of additional facilities included in the 
detailed plans which were not specified in the Commission's order 
of May 10, 1917, which additional facilities were heretofore 
approved because of the existing limitation of the shares of the 
State and the railroad, is hereby determined to be $20,000. 

(5) That in view of the peculiar type of structure and the 
involved facilities which are wholly for the benefit of the city 
of Watertown and not necessarily a part of the elimination of 
Court street grade crossing of the New York Central railroad, 
the amount chargeable to the State of New York as its share of 
the cost of the elimination shall not exceed $87,475, and that the 
amount chargeable to the New York Central Railroad Company 
as its share of the cost of elimination shall not exceed $174,950, 
said amounts being respectively one-quarter and one-half of the 
difference between the aforesaid $420,000, less $20,0t)0 and 
$50,100. 

(6) That all costs and expenses incidental to or resulting from 
carrying out the order of the Commission in the above-entitled 
matter in excess of $420,000 shall be chargeable to and paid by 
the city of Watertown. 

(7) That, if the final total cost of the elimination, including 
all charges incidental to carrying out the Commission's order of 
May 10, 1917, and the additional facilities above referred to 
shall be less than $420,000, then the State of New York shall be 
credited with one-quarter of the difference between the final total 
and the aforesaid $420,000, the city of Watertown with one- 
quarter of aforesaid difference, and the New York Central Rail- 
road Company with one-half of aforesaid difference, these credits 
to be applied at the time of the final accounting between the 
interested parties. 



EDUCATION DEPARTMENT 



In the Matter of the Appeal from the Refusal of District No. 
10, Town of Livingston, Columbia County, to Provide Adequate 
Instruction for Certain Pupils 

Case No. 462 

(Decided July 22, 1919) 

Academic instruction — when district must provide for advanced instruction 
in another district 

If it is impossible or impracticable for tne district to provide instruc- 
tion in advanced subjects in the home school for pupils who are required 
to attend upon instruction, the district must provide advanced instruc- 
tion under contracts or arrangements made with boards of education in 
districts where academic instruction is provided. 

Wm. Harry Montgomery, attorney for appellants. 
Robert G. Patrie, attorney for respondent. 

Finley, Commissioner. — The appellants, Alfred L. and 
Georgia E. Fraser, are residents of common school district No. 
10, town of Livingston, Columbia county, and are. the parents of 
Mildred Fraser, who is thirteen years of age. Their petition 
alleges that the daughter has completed the elementary subjects 
taught in the school in the district in which they reside and having 
passed her preliminary examinations and obtained a regents 
certificate, is ready to take up academic work. The school in the 
district does not provide ficpdomic instruction. When the matter 
was brought to the attention of the district at an annual meeting 
held on June 4, 1918, it was voted not to pay the tuition of any 
academic pupil to be instructed under contract in another district. 
No provision has been made in the home school for academic 
instruction. 

The daughter of the appellants, being within the compulsory 
school ages, is required to attend school, and if she attends the 

170 * 



Refusal of District to Providb Instruction 171 

Education Department [Vol. 20] 

school in the district where she resides it will be necessary for her 
to take over again the subjects which she has completed. It is the 
duty of a district to provide reasonably adequate instruction for 
the children residing therein. The trustee of a common school 
district may prescribe the courses of study to be pursued in the 
school of the district. He may employ teachers to give such 
instruction as may be reasonably required to meet the needs of the 
children who are compelled to attend the school in the district. 
See Education Law, § 275, subds. 8, 10. If it is impossible or 
impracticable for the trustee to provide instruction in academic 
subjects in the home school for pupils who are required to attend 
upon instruction, the district must provide advanced instruction 
under contracts or arrangements made with boards of education 
in districts where academic instruction is provided. 

A district does not perform its full duty toward the children 
residing within its boundaries unless it makes proper provision in 
some satisfactory way for the instruction of such of them as have 
completed the work in the grades, taught in the school of the dis- 
trict. It has ample power to make proper provision for the 
instruction of such children, and wherever a controversy arises as 
to such instruction and it is brought to the Commissioner of Edu- 
cation by way of appeal, an order will be entered directing the 
district to either provide academic instruction in the home school 
or make arrangements with some other district for giving such 
instruction. See Matter of Academic Instruction of Children, 10 
St. Dept. Eep. 449; Matter of Riley, 15 id. 469. 

There is nothing in this case to show whether the pupils have 
been in attendance upon academic instruction in some other dis- 
trict during the present school year. If the daughter of the appel- 
lants has been in attendance upon academic instruction in a union 
free school district maintaining a properly approved academic 
department or high school, the trustee of district No. 10 must pro- 
vide for the payment of the difference between the amount allowed 
as state aid on account of such instruction and the charge for 
tuition made by the district where the pupil has attended. 

Thft appeal is sustained. 



172 State Department Reports 

[Vol. 20] Education Department 

It is hereby ordered that the trustee of school district No. 10, 
town of Livingston, Columbia county, be and he hereby is directed 
to raise by tax levy as provided by law such amount as may be 
required to pay the difference between the tuition charged for the 
instruction of Mildred Fraser during the school year ending July 
31, 1919, and the amount apportioned by the State on account of 
her instruction to the district where she attended. 



In the Matter of the Appeal of Meeritt H. Bathrick from the 
Failure of District No. 19, Town of Rome, Oneida County, to 
Provide Academic Instruction for his Son 

Case No. 463 

(Decided July 22, 191&) 

Academic instruction — apportionment of cost of tuition In neighboring 
district. 

Where instruction in advance of the elementary grades is not fur- 
nished in the home district, the home district must pay the difference 
between the amount to be received from the State on account of the 
instruction of the pupil and the amount charged by the board of educa- 
tion of the district furnishing the instruction. 

G. L. Prescott, attorney for appellant. 

Fihxey, Commissioner. — It appears from the petition in this 
case that the appellant is the father of Milton H. Bathrick, who 
is fifteen years of age. The appellant's son completed the course 
of instruction in the school in district No. 19, town of Borne, 
where he resides, about January 1, 1918, and since that time has 
been in attendance upon academic instruction at the Rome Free 
Academy in the city of Rome, N. T. 

There is nothing to indicate that instruction in advance of the 
elementary grades is furnished in the school in the district. The 
appellant alleges that from January 1, 1918, until the close of 
the school year the appellant's son was instructed at the expense 



Matter of Leonard 173 

Education Department [Vol.20] 

of the town, under the township school law, at the Rome Free 
academy. The trustee of the district now refuses to pay the 
tuition of the appellant's son at such academy. 

The petition presents facts indicating clearly that the petition- 
er's son is entitled to academic instruction either in the home 
district or under a contract or arrangement made with the board 
of education in some other district. The district should pay the 
difference between the amount to be received from the State on 
account of the instruction of the petitioner's son and the amount 
charged by the board of education of the city of Rome for such 
instruction. The district will, therefore, be required to pay the 
difference between the regular tuition rate charged for academic 
instruction at the Rome Free Academy and the sum apportioned 
to the city on account of the instruction of the appellant's son. 
This difference must be paid by the district. 

The appeal is sustained. 

It is hereby ordered that the trustee of school district No. 19, 
town of Rome, be and he hereby is directed to pay such amount 
as may be determined to be the difference between the amount 
charged for the academic instruction of Milton H. Bathrick at 
the Rome Free Academy during the school year ending July 81, 
1919, and the amount apportioned by the State on account of 
such instruction, and the said trustee is hereby authorized and 
directed to levy a tax to pay the said difference. 



In the Matter of the Appeal of Minnie E. Leonard Relative to 

the Payment of Teacher's Wages 

Case No. 464 

(Decided July 22, 1919) 
Compensation of teachers in country districts. 

Albert W. Emerson, attorney for appellant 



174 State Department Repobts 

[Vol. 20] Education Department 

Finley, Commissioner. — The appellant, Minnie E. Leonard, 
alleges that on December 3, 1917, she was directed by the district 
superintendent of schools of the second supervisory district of 
Steuben county to proceed to district No. 5 of the town of Brad- 
ford and to teach five days, December third to seventh inclusive; 
that again, on January 1, 1918, she was directed by said superin- 
tendent to proceed to district No. 3 of the town of Bradford 
to teach four days, January first to fourth inclusive; that she 
taught as directed and demands compensation at the rate of 
two dollars and forty cents per day or twelve dollars per school 

W66K« 

During the periods mentioned the said districts were under 
the management and control of the town board of education of 
the town of Bradford. An answer has been interposed on behalf 
of said board in which it is alleged that Miss Leonard taught 
school in district No. 3 of the town of Bradford from October 8, 
1917, until December 7, 1917, with the exception of the days 
of October twenty-ninth and November thirtieth, in all, eight 
weeks and three days; that she also taught in district No. 5 of 
the town of Bradford early in January, 1918, leaving that school 
on January 4, 1918. It would therefore appear that the entire 
time during which Miss Leonard taught in the Bradford schools 
during the school year 1917-1918 amounted to nine weeks and 
two days, and that the compensation which she earned at the 
rate of $12 per week amounted to $112.80. Deducting therefrom 
1 per cent for the State Teachers' Retirement Fund, Miss Leonard 
was entitled to receive $111.68. The answer of the board of edu- 
cation shows that she was paid $116.42 for services thus rendered. 
The board alleges that Miss Leonard has been paid in full. In 
so far as can be determined upon the facts presented, I am unable 
to find that there is anything due Miss Leonard on account of 
services rendered by her in the town of Bradford. Miss Leonard 
has not replied to the allegations which are set forth in the 
answer of the board of education, and it, therefore, stands 
admitted that she has received from the board the said sum 
above mentioned. 

The appeal is dismissed. 



Matter of Mullins 175 



Education Department [Vol.20] 



In the Matter of the Appeal of Kathleen L. Mullins Relative 
to her Suspension from her Position as Teacher in the High 
Schools of the City of New York and the Failure to Renew 
her License as Assistant Teacher of Spanish 

Case No. 465 

(Decided July 22, 1919) 

When salary may be withheld — when Commissioner of Education will not 
interfere with ruling of acting superintendent of schools in not renewing 
license to teach. 

Where a teacher in a high school fails to explain her continued 
absence from her duties, the committee on high schools is justified in 
withholding her salary during such absence. Where the acting superin- 
tendent of schools refuses to renew her license to teach at a time when 
section 1089 of the Greater New York charter was in force the Commis- 
sioner of Education on appeal will not interfere with the discretion 
exercised by the acting superintendent of schools. 

William P. Burr, Corporation Counsel, attorney for 
respondents. 

Charles Mclntyre, of counsel. 

Finley, Commissioner. — The appellant, Kathleen L. Mullins, 
was appointed teacher of Spanish in the Harlem Evening High 
School for Women in October, 1902. On October 3, 1913, the 
appellant received a license as an assistant teacher of Spanish 
in a day high school, which was good for one year from the 
commencement of service. On September 11, 1914, she began 
her service under such license in the Bay Ridge High school. Her 
license as assistant teacher of Spanish in a day high school, 
under the rules and regulations of the board of education of the 
city of New York and the provisions of the city charter then 
in force, expired on September 11, 1915, unless it was renewed. 

She continued in the service as assistant teacher of Spanish in 



176 St atx Department Reports 

[Vol.20] Education Department 

the Bay Ridge High School until March 18, 1915. During 
this period she was also employed as a teacher of Spanish in 
the Harlem Evening High School for Women. It appears from 
the facts presented in the papers that the appellant was injured, 
on March 18, 1915, while in the performance of her duties at 
the Bay Ridge High School, having been struck upon the head 
by a ball or other missile thrown by one of the pupils. She 
did not return to her duties as assistant teacher of Spanish in 
the Bay Ridge High School but apparently was absent from 
duty without either seeking or receiving a leave of absence. 

It appears, further, that District Superintendent Bardwell 
requested the appellant to call on him in regard to her absence 
on April 22, 1915. She replied to this request by stating that 
she did not care to call on him because she was then suffering 
from the effects of the injury above referred to. Under date 
of April 26, 1915, the district superintendent wrote her, calling 
her attention to the fact that notwithstanding her injuries she 
was in constant attendance upon sessions of the Harlem Evening 
High School for Women, and stating that he did not understand 
why, if she was well enough to attend to her duties as teacher in 
the evening school, she was unable to call at his office when 
requested to do so. The district superintendent further notified 
her at that time that under direction of the chairman of the 
committee on high schools and training schools her name had been 
stricken from the payroll of the Bay Ridge High School from 
and after the date of April 1, 1915. 

The action taken by the committee on high schools was under 
subdivision 5-a of section 58 of the by-laws of the board of 
education, which requires the city superintendent of schools to 
report continuous or long absences of members of the teaching 
staff " to the appropriate committee of the Board of Education, 
which committee shall have power to direct the auditor to with- 
hold all payment of salary from the absentee until said commit- 
tee shall have determined what proceedings shall be taken because 
of such absence." The committee on high schools and training 
schools, to which the absence was reported at a meeting held 



Matter of Mullinb 177 

Education Department [Vol. 20] 

on May 4, 1915, confirmed the action of the chairman of the 
committee in directing the auditor to withhold the appellant's 
salary. An investigation of the matter was made by the com- 
mittee, at which the appellant and the principal of the Bay 
Ridge High School appeared and were questioned by the members 
of the committee. This investigation pertained solely to the 
alleged cause of absence. No charges had been preferred against 
the appellant. She was not, therefore, suspended under charges 
as authorized by section 1089 of the Greater New York charter, 
then in force. The so-called suspension referred to by the 
district superintendent in his letter of March 26, 1915, and by 
Mr. Somers, the chairman of the committee on high schools and 
training schools, in his letter of February 7, 1916, had reference 
to the action taken by such committee under subdivision 5, 
section 58 of the by-laws of the board, which related only to 
the withholding of the salary of teachers because of absence 
from duty. 

The appellant admits that she performed her duties as a teacher 
of Spanish in the Evening High School for Women, notwith- 
standing her injury, during the period of her absence from her 
duties in the Bay Ridge High School. She did not apparently 
explain to the satisfaction of the district superintendent and the 
committee on high achools and training schools the reason for 
her continued absence from her duties in the day high school. 
The committee were justified, under the circumstances, in their 
determination that her salary should be withheld during such 
absence. They were authorized to direct the withholding of her 
salary under the by-law referred to and it is not contended by the 
appellant that this by-law was invalid or ineffectual. 

Her license as an assistant teacher of Spanish in a day high 

school expired by limitation of time on September 11, 1915. 

The acting city superintendent of schools refused to renew such 

license. He notified her on September 10, 1915, that " Owing 

to the unsatisfactory character of your service in the Bay Ridge 

High School, during the past year, I have decided not to renew 

your license as assistant teacher of Spanish, after September 

11, 1915." 

State Deft. Rept. — Vol. 20 12 



178 Stats Department Reports 

[Vol.20] Education Department 

Under the statute then in force (Greater New York Charter, 
§ 1089) it was provided that " Licenses to teach shall be issued 
by the city superintendent of schools for a period of one year, 
which may be renewed without examination in case the work 
of the holder is satisfactory to the city superintendent for two 
successive years. At the close of the third year of contiguous, 
successful service, the city superintendent may make the license 
permanent." The renewal of a license and the issuance of a 
permanent license under this provision are within the discretion 
of the city superintendent of schools. The Commissioner of 
Education on appeal will not interfere with the exercise of such 
discretion except upon it appearing clearly that there has been 
an unjust and undue discrimination against a teacher. 

No facts are adduced upon this appeal justifying any inter- 
ference with the act of the city superintendent in respect to 
the appellant's license. The conclusion must therefore be that 
the committee on high schools and training schools was authorized 
to direct the auditor to withhold the salary of the appellant 
during her continued absence from her duties as an assistant 
teacher of Spanish in the Bay Ridge High School, and that 
she is not entitled as a matter of law to the renewal of her license. 
Without such license she may not be reinstated as an assistant 
teacher of Spanish in the day high schools of the city of New 
York. 

The appeal is dismissed. 



In the Matter of the Appeal of Norman W. Millar from the 
Failure of District No. 1, Town of Kortright, Delaware County, 
to Provide Adequate Instruction for his Daughter 

Case No. 469 

(Decided July 22, 1019) 

Home district not liable for cost of transportation and maintenance of pupil 
receiving instruction in advanced subjects in another district. 

While a child within the compulsory school age is entitled to instruc- 
tion in advanced subjects in a school of another district if there are no 



Matter of Millar 179 



Education Department [Vol.20] 



such facilities in the home district and the tuition charged in excess of 
the State tuition is a proper charge against the home district, the home 
district, however, in such instances is not liable for the cost of trans- 
portation or maintenance of the pupil. 

O'Connor & O'Connor, attorneys for appellant 
Andrew J. McNaught, attorney for respondent. 

Fitscley, Commissioner. — The appellant herein, Norman W. 
Millar, is a resident and taxpayer of school district No. 1, town 
of Kortright, Delaware county. His daughter, Helen Elizabeth 
Millar, is fourteen years of age, and is attending the Delaware 
Academy, the high school at Delhi, N. Y. She has completed the 
course of instruction provided in the school in the district where 
she resides and the trustee of the district has failed to provide 
adequate instruction for her in such school. The appellant asks 
that the district be directed to provide instruction in advance of 
that now furnished in the school of such district and to pay to 
the appellant the amount necessarily expended by him in pro- 
viding academic instruction for his daughter at the Delaware 
Academy, including board and transportation in the amount of 
five dollars and fifty cents a week. 

District No. 1, Kortright, is a common school district and main- 
tains a department school with about seventy pupils in attendance. 
The school provides instruction in academic subjects equivalent 
to about two years of high school work. In this respect it provides 
greater educational advantages than is usual in common school 
districts, and there is no sufficient reason for directing that more 
advanced instruction be furnished. 

It appears from the papers presented that the appellant's 
daughter has completed all the work provided in the school of 
the district, and, being within the compulsory school age, she 
is entitled to instruction in advanced subjects, either in the dis- 
trict where she resides or in the school of some other district. The 
tuition charged for her instruction in the school of another dis- 
trict in excess of the State tuition is a proper charge against the 
home district. If the appellant has been compelled to pay tuition 



180 State Depabtmewt Reports 

[Vol. 20] Education Department 

for her instruction at the Delaware Academy, he is entitled to 
reimbursement from the district. To this extent the rule laid 
down in the case of Matter of Academic Instruction of Children, 
10 St. Dept. Rep. 449, and in the case of Matter of Appeal of 
Fraser, Appeal No. 462, decided July 22, 1919, ante, 170, applies 
and provision must be made by tax levy for the payment of the 
tuition, in excess of the State tuition charged for the instruction 
of the appellant's daughter. 

The appellant is not, however, entitled to reimbursement for 
payments made by him on account of transportation and the living 
expenses of his daughter while in attendance at the school in 
Delhi. There is no provision of law or regulation or policy of 
the department which imposes upon a district where a pupil re- 
sides the cost of transportation or maintenance, in a case where 
such district does not provide in its home school for instruction 
in subjects in advance of the elementary grades. 

The appellant does not ask reimbursement for the payment of 
tuition in excess of the State tuition. It may be inferred that 
no excess tuition is charged by the Delhi district for the academic 
instruction of non-resident pupils. This being the case, the 
appellant is not entitled to the relief which he seeks. 

The appeal is dismissed. 



In the Matter of the Appeal from the Failure of School District 
No. 6, Town of Halfmoon, to Provide Academic Instruction for 
William S. Massie 

Case No. 470 

(Decided July 24, 1919) 

When parent cannot compel payment of excess tuition fee for instruction of 
child in a high school outside the home district. 

A parent may not compel the payment of excess tuition for academic 
instruction of a child in a high school or academic department outside of 
the district where he resides unless he makes application to the trustee 
of the home district for the payment of such tuition or gives notice that 
he desires his child to receive academic instruction either in the home 
district or in some other district. 



Matter of Massib 181 



Education Department [Vol.20] 



Howard J. Reilly, attorney for respondent 



Finlbt, Commissioner. — William R. Massie, who is a resi- 
dent and qualified elector in district No. 6, town of Halfmoon, 
Saratoga county, has complained because of the failure of the 
trustee of such district to provide academic instruction for his 
son. In his petition he does not state the age of the son, but the 
answer alleges that he is beyond the compulsory school age. The 
son has attended the high school at Mechanicville during the past 
school year. It does not appear in the petition that the appellant 
made application to the trustee of his district for the payment of 
the difference between the State tuition and the tuition charged by 
the board of education of the city of Mechanicville for academic 
instruction* It is alleged in the answer that the union free 
school district at Waterford maintains an academic department 
at which non-resident academic pupils are received for the State 
tuition. It does not appear in the petition of the appellant that 
there was any good reason why his son should not attend at the 
Waterford high school. 

A parent may not compel the payment of excess tuition for 
academic instruction of his child in a high school or academic 
department outside of the district where he resides, unless he 
makes application to the trustee for the payment of such tuition 
or gives notice that he desires his child to receive academic in- 
struction either in the home district or in some other district 
The trustee must then be given an opportunity to determine as 
to where is the proper place for the instruction to be given. The 
parent may not in every case compel the trustee to furnish aca- 
demic instruction in a particular district. On this account the 
appellant is not entitled to the relief which he seeks. 

The appeal is dismissed. 



182 State Department Repobts 



[Vol.20] Education Department 



In the Matter of the Appeal Relative to the Election of a Trustee 
in School District No. 11, Town of Murray, Orleans County 

Case No. 47l 

(Decided July 24, 1919) 

School district elections must be by ballot — § 227 of the Education Law. 

All district officers must be elected by ballot, section 227 of the Educa- 
tion Law. The election of a trustee by motion directing the clerk to cast 
one ballot is unauthorized and will be set aside. 

Fikley, Commissioner. — It appears from the petition upon 
this appeal that at the annual meeting held in school district 
No. 11, town of Murray, Orleans county, the trustee was elected 
by motion directing the clerk to cast one ballot for Dennison Waite 
as trustee of such district. The motion being carried, the clerk 
of the meeting cast the ballot for the said Waite and he was 
declared duly elected as trustee of the district. 

It has been held upon appeal in a number of cases that an 
election in such a manner does not conform to the requirements 
of section 227 of the Education Law, which requires all district 
officers to be elected by ballot. Decision of Commissioner of Educa- 
tion, 1915, 6 St Dept. Rep. 594; Decision of Supt. of Public 
Instruction (1895), Judicial Decisions, p. 214. On this account 
the election of Mr. Waite as trustee must be set aside and a new 
election held. 

The appeal is sustained. 

It is hereby ordered that the action of the annual meeting in 
district No. 11, town of Murray, Orleans county, held on May 
6, 1919 whereby Dennison Waite was declared elected trustee, 
be and the same hereby is set aside; and 

It is hereby further ordered that the district clerk of such dis- 
trict be and he hereby is directed to call a special meeting of the 



Matter of Msszleb 183 



Education Department [Vol.20] 



qualified electors of such district to be held within twenty days 
from the date hereof, for the purpose of electing a trustee to fill 
the vacancy caused by the failure to elect a trustee at the annual 
meeting. 



In the Matter of the Appeal of Christopher L. Meszler and 
George B. Oliver from the Action of the Annual Meeting in 
School District No. 11, Town of Western, Oneida County, in 
Respect to the Payment of Academic Tuition 

Case No. 474 

(Decided July 28, 1919) 

Tuition fee allowed by State for non-resident academic pupils — chapter 368, 
Laws of 19x9. 

Under the law as amended by chapter 368 of the Laws of 1919, 
the State allows forty dollars each for the instruction of non-resident 
academic pupils. The tuition in excess of this amount must be paid by 
the trustee of the home district. 

Baker & Baker, attorneys for appellants. 

Finijby, Commissioner. — The appellants, Christopher L. Mesz- 
ler and George D. Oliver, are residents and taxpayers of school 
district No. 11, town of Western, Oneida county. At the meeting 
held in this district on May 6, 1919 a resolution was submitted 
authorizing the trustee of the district to contract for the ensuing 
year with the board of education of the city of Rome for the 
academic instruction of the pupils of the district who have com- 
pleted the elementary grades. This resolution was defeated. 

The appellant George B. Oliver is the parent of a child four- 
teen years of age, who completed her elementary subjects previous 
to September, 1918. The appellant Meszler is the parent of a 
child who was sixteen years of age on the 21st day of November, 
1918, and had previous to September, 1917, completed his sub- 
jects in the elementary grades in district No. 11. Both of these 
pupils were in attendance at the Rome High School during the 
past school year. The appellants paid at the rate of thirty dol- 



184 State Department Reports 

[Vol.20] Education Department 

lars each for the academic instruction of their children, over and 
above the State tuition allowed by law. They ask for the re- 
versal of the action of the annual meeting in refusing to adopt 
the resolution above referred to. They do not demand reimburse- 
ment of the amount paid by them for academic instruction of 
their children during the past year. 

The district is required to either provide academic instruction 
for the pupils of the district who have completed the elementary 
grades in the school of the district or to pay the difference between 
the State tuition and the tuition charged by the board of educa- 
tion of the city of Borne for such academic instruction. The 
trustee of the district must, notwithstanding the action of the 
district meeting, include in its tax levy an amount sufficient to pay 
such difference. The trustee is required to enter into a contract 
or to make arrangements for the instruction of such pupils in 
the high school of the city of Rome. 

Under' the law as amended by chapter 368 of the Laws of 
1919, the State will allow forty dollars each for the instruction 
of non-resident academic pupils. The tuition, in excess of this 
amount, charged by the board of education of the city of Rome 
must be paid by the trustee of district No. 11, town of Western, 
for the number of pupils who are given academic instruction in 
the high school of such city. 

The appeal is sustained. 

It is hereby ordered that the trustee of school district No. 11, 
town of Western, Oneida county, be and he hereby is directed 
to make such arrangements or contracts with the board of educa- 
tion of the city of Rome as may be necessary for the instruction 
of such pupils as have completed the courses of elementary in- 
struction in the school of said district No. 11, and the trustee of 
said district is hereby directed to include in his tax levy for the 
school year of 1919-1920 an amount sufficient to pay the excess 
tuition over the tuition allowed by the State for the instruction 
of such pupils, and when such amount is raised by tax to pay the 
same to the board of education of the city of Rome. 



Matter of Smith 185 



Education Department [Vol. 20] 



In the Matter of the Appeal of William H. Smith Relative to 
Payment of Non-resident Academic Tuition 

Case No. 475 

(Decided July 28, 1919) 

Pupil not entitled to academic instruction at expense of district unless ho 
has passed in all of the preliminary subjects. 

Where a pupil has completed all of the elementary subjects except one, 
he is not entitled to academic instruction at the expense of the district. 
The principle declared in the Appeal of Fraser, 20 State Dept. Rep. 170, 
will not be extended. 

Finley, Commissioner. — The appellant, William H. Smith, 
resides in school district 3To. 2, town of Morris, Otsego county. He 
is the father of a boy fifteen years of age, who has completed all 
of the elementary subjects in the school in such district except 
spelling. The matter of the payment of the tuition of the appel- 
lant's son was brought to the attention of the annual meeting held 
May 6, 1919, and such meeting refused to take action thereon. 
The appellant asks that he be reimbursed for the tuition paid by 
him for his son. 

It appears that the appellant's son had not at the time when he 
entered upon instruction at the Morris High School completed all 
of the elementary subjects in the school in the district where he 
resides. In cases involving the payment of academic tuition such 
as that of the Appeal of Fraser, Appeal No. 462, decided July 22, 
1919, ante, 170, it has appeared that the pupils for whom academic 
instruction was sought had successfully completed all of the elemen- 
tary subjects in the school of the district where they resided. The 
principle declared in the Fraser case should not be extended so as 
to cover cases where pupils have not completed all of the elemen- 
tary subjects. It appearing that the appellant's son had not passed 
in all of the preliminary subjects, he was not entitled to academic 
instruction at the expense of the district. 

The appeal is dismissed. 



186 State Department Reports 



[Vol. 20] Education Department 



In the Matter of the Academic Tuition of Certain Pupils in 
District No. 3, Town of Otsego, Otsego County 

Case No. 477 

(Decided August 5, 1019) 

Children under sixteen years of age at beginning of school year are 
entitled to academic instruction at the expense of the district although 
they become sixteen years of age during the school year. 

Arnold & Cooke, attorneys for appellants. 

Finley, Commissioner. — The appellants, Mary Winsor, Fred 
G. Johnson and Maude E. Thornton, are residents of school 
district No. 3, town of Otsego, Otsego county. They are the 
parents, respectively, of Martha Winsor, who was sixteen years 
of age on October 9, 1918; Blanche Johnson, who was sixteen 
years of age on October 1, 1918; and Edna Thornton, who was 
twelve years of age on May 4, 1918. All of such children have 
completed the courses of elementary instruction in the school in 
district No. 3, town of Otsego. Such children have attended 
upon academic instruction at the Cooperstown high school for the 
school year of 1918-1919. A district meeting was held on October 
1, 1918, for the purpose of voting upon the question of providing 
for the academic instruction of such children. The district 
refused to appropriate money to pay the difference between the 
State tuition and the tuition charged by the board of education 
of the Cooperstown union free school district for the academic 
instruction of such children, 

At the time they began their attendance upon academic instruc- 
tion in the Cooperstown high school, in September, 1918, all of 
these children were within the compulsory school age. At that 
time they were entitled, under the rule declared in the case of 
Appeal of Fraser, Appeal No. 462. decided July 22, 1919 (20 
State Dept Eep. 170), to academic instruction at the expense of 



Matter of Van Aiken 187 

Education Department [Vol. 20] 

the district. The district meeting should have appropriated money 
and directed the trustee to pay the difference between the State 
tuition and the tuition charged by the board of education of the 
Cooperstown district for the academic instruction of such children. 
The fact that two of these children became sixteen years of age dur- 
ing the school year does not affect their right to academic instruc- 
tion. Being under sixteen when the school year began, they were 
compelled to begin their attendance upon academic instruction, 
and it is only reasonable to conclude that the district should 
continue the arrangement or provision for their instruction in 
academic subjects during the remainder of the year. 

The appeal is sustained. 

It is hereby ordered that the trustee of school district No. 3, 
town of Otsego, Otsego county, be and he hereby is directed to 
include in his annual tax levy for the school year of 1919-1920 
an amount sufficient to pay the difference between the State 
tuition and the tuition charged by the board of education of the 
Cooperstown union free school district for the academic instruc- 
tion of Martha Winsor, Blanche Johnson and Edna Thornton 
during the school year of 1918-1919, and the amount when 
raised by tax is hereby directed to be paid to the parents of such 
children upon presentation of proof that the said difference in 
tuition was paid by them to the said board of education. 



In the Matter of the Appeal of Willabd N. Van Aikbn Rela- 
tive to the Payment of the Cost of Academic Instruction 

Case No. 479 

(Decided August 5, 1919) 

When excess tuition fee not allowed. 

Where a board of education of a district makes a contract with another 
district for academic instruction a resident of the district is not entitled 
to reimbursement for excess tuition fee unless his children attend the 
school with which the contract is made. 



188 State Department Reports 

[Vol. 20] Education Department 

I — ■ 

Ward N. Truesdell, attorney for appellant. 

Fiitley, Commissioner. — The appellant, Willard N. Van 
Aiken, resides in the village of Poolville, in school district No. 3, 
town of Hamilton, Madison county. He has two children, Ruby 
and Robert Van Aiken, the first of whom is fourteen years of age 
and the latter was sixteen years of age prior to the time of the 
beginning of school in 1918. Both children have passed all of 
their preliminary subjects and have completed the courses of 
instruction provided in the school in the district where they reside. 
The children have attended the high school in the village of Sher- 
burne. The tuition charged for a nonresident academic instruc- 
tion in that district is forty dollars. The appellant alleges that 
the trustees refused to call a special meeting to vote upon the 
question of providing academic instruction for the appellant's 
children. He asks in his petition that an order issue directing the 
trustees of district No. 3, town of Hamilton, to call a special 
meeting of the qualified electors of the district for the purpose 
of acting upon the proposition to authorize and direct the trustees 
of the district to contract with the Sherburne union free school dis- 
trict for the academic instruction of his children. 

The answer to the petition shows that a meeting was called by 
action of the board of education of the Poolville district to vote on 
the proposition of furnishing academic instruction to qualified 
pupils of the district. The meeting adopted a resolution author- 
izing the board of education to contract with the board of educa- 
tion of the Earlville union free school district or with the board 
of education of the Hamilton union free school district for the 
academic instruction of such pupils in the district as held pre- 
liminary certificates and were under sixteen years of age. The 
board of education was further directed not to make any contracts 
for the instruction of pupils in the academic department of any 
other district. 

It appears that Earlville and Hamilton are both nearer to Pool- 
ville than Sherburne. It is necessary to travel by rail to attend 
upon instruction at the high school in either Earlville or Sher- 



Mattkb of Teanspobtation of Childbbn 189 

Education Department [Vol. 20] 

burne. It is not sufficiently established by the evidence in the 
case that there is any particular hardship accruing to either of the 
children of the appellant in requiring them to attend at either the 
Earlville or the Hamilton high school. 

From the facts in the case it appears that the board of educa- 
tion of union free school district No. 3, town of Hamilton, has 
done all that can be reasonably expected of it in the way of provid- 
ing academic instruction for the children of the district who have 
completed the courses of instruction provided in the home school. 
The appellant may, if he sees fit, send his children to the Sher- 
burne high school, but he is not entitled to reimbursement for 
excess tuition paid by him for such academic instruction. 

The appeal is dismissed. 



In the Matter of the Transportation of Childben in School 
District No. 9, Town of Van Etten, Chemung County 

Case No. 480 

(Decided August 5, 1919) 

When transportation of children may be discontinued — Matter of Appeal, 
etc., District No. 8, Tioga Town and County (19 State Dept. Rep. 374), 
distinguished. 

Transportation of children in a consolidated district may be discon- 
tinued when a school is reopened within a reasonable distance of the 
homes of the children attending. 

Frederick E. Hawkes, attorney for appellant 

Fihxey, Commissioner. — It appears from the papers herein 
that school districts Nos. 6, 7 and 9, town of Van Etten, Chemung 
county, were consolidated into school district No. 9 of such town 
some time during the school year of 1914-1915. The appellant, 



190 State Dipabtmbnt Reports 

[Vol.20] Education Department 

Oscar Himmanen, resides in what was formerly sehool district 
No. 7 of the town of Van Etten. He is the father of four chil- 
dren who reside with him, one a girl of the age of twelve years, 
and three boys of the ages respectively of eleven, ten and seven 
years. 

After the consolidation the schoolhouse in former district No. 
9 was used for the instruction of all the pupils in the consolidated 
district. During the time that the school in district No. 9 was 
used, transportation was furnished to the appellant's children. At 
the annual meeting held in the consolidated district on June 4, 
1918, it was determined that pupils should not thereafter be con- 
veyed to and from school at the expense of the district. It was 
also decided about this time that the schoolhouse in former dis- 
trict No. 6 should be opened and instruction given at that school 
to pupils in former districts Nos. 6 and 7. This schoolhouse is 
located less than two miles from the residence of the appellant. 

The appellant complains of the failure of the trustee of the 
district to provide transportation for his children to and from 
school and asks that an order be issued directing that such trans- 
portation be furnished at the expense of the district. 

The respondent, trustee of district No. 9, alleges in his answer 
that at the time of the consolidation no school was maintained in 
district No. 6. There is nothing to indicate as to what action was 
taken in regard to transportation of the children of district No. 7 
at the time of consolidation. It does not appear that there was 
any understanding as to the transportation of children in former 
district No. 7 when the consolidation took place. It is apparent 
that while the children were attending the central school in the 
district, that is the school in former district No. 9, transportation 
was furnished to the appellant's children and others who were so 
located that they could not conveniently walk to and from school. 
This was doubtless in recognition of the general rule which obtains 
where districts are consolidated and all the children of the con- 
solidated district are required to attend upon instruction at a 
central school. 

The trustee was authorized, and I think from the facts that 



Matte* of Transportation of Children 191 

Education Department [Vol. 20] 

appear, justified, in opening the schoolhouse in former district 
No. 6. This schoolhouse was nearer the residence of the appellant 
than the schoolhouse in district. No. 9. It being established that 
the distance is not so great that the children may not walk, it would 
not be reasonable to require the consolidated district to provide 
transportation for the children in former district No. 7. 

In view of the particular facts appearing in this case, the dis- 
trict ought not to be compelled summarily to provide transporta- 
tion at all times for the children living in district No. 7. This 
case differs from Matter of Appeal Relative to the Transportation 
of Children in District No. 8, Town of Tioga, Tioga County, 
(Hoffman, Appellant) Appeal No. 452, decided February 5, 
1919, 19 State Dept. Rep. 274. In that case it appears that the 
district in which the children of the appellant resided was, prior 
to the consolidation, a contracting district and that for a 
number of years prior to consolidation no school had been 
maintained in the district where the appellant resided, but 
that the children thereof had been carried at the expense of 
the district to and from the schoolhouse in the district with 
which the district was consolidated. It was held that it might 
be inferred from the existing situation of the two districts 
that the consolidation was not to deprive the children of the 
dissolved district of the privilege of transportation. No such 
fact appears in this case. It further appeared in the Hoffman 
case that many, if not all, of the children lived more than two 
miles from the schoolhouse in the consolidated district. It does 
not appear in this case that the children of the appellant live more 
than two miles from the schoolhouse in former district No. 6, 
where they are required to attend upon instruction. 

The appeal is dismissed. 



192 State Department Reports 



[Vol. 20] Education Department 



In the Matter of the Appeal from the Election op Trustee in 
District No. 17. Town of Hector, Schuyler County 

Case No. 487 

(Decided August 23, 1919) 

Election of trustee — when second ballot may be taken. 

The chairman of the meeting and one other were nominated for the 
office of trustee. Seventeen votes were cast, nine for the chairman and 
eight for his competitor. The chairman permitted another ballot to be 
taken. Nineteen votes were cast, the chairman receiving eight and his 
competitor eleven. Held, that the chairman having permitted a second 
ballot gave notice to the meeting that he did not accept the office of 
trustee to which office he was elected on the first ballot; that the second 
ballot was valid and that his competitor was duly elected trustee of the 
district. 

Finley, Commissioner. — At the annual district meeting held 
in district No. 17, towns of Hector and Ulysses, on May 6, 1919, 
H. H. Sloan was chosen chairman. The meeting proceeded to 
the election of a trustee and Mr. Sloan, the chairman of the 
meeting, and Mr. Bower were nominated for that office. On the 
first ballot seventeen votes were cast, of which Mr. Bower received 
eight and Mr. Sloan nine votes. After some argument the chair- 
man permitted another ballot to be taken upon the election of 
trustee which resulted in nineteen votes being cast, of which 
Mr. Bower received eleven and Mr. Sloan eight. Mr. Bower 
was thereupon declared elected. 

The appeal is brought by one of the electors of the district who 
contends that Mr. Sloan, having received a majority of the votes 
cast upon the first ballot, was elected trustee and that the meeting 
was without power to take another ballot. 

The fact that the chairman of the meeting was the same person 
who received a majority of the votes upon the first ballot and 
that as chairman he permitted a second ballot to be taken furnishes 
conclusive evidence that he did not regard the first ballot as final 
and in effect gave notice to the meeting that he did not accept the 



Mattes o* Heai/t 193 



Education Department [Vol. 20] 



office as the result of such hallot. It must be assumed that in 
permitting a second ballot to be taken the chairman either declined 
to accept the office or that he conceded some irregularity upon the 
first ballot taken. The meeting, therefore, properly proceeded 
to take a second ballot. 

Under such circumstances the result of the second ballot, upon 
which Mr. Bower was declared elected by majority vote of eleven 
to eight, must stand as valid and binding upon the district and 
Mr. Bower is, therefore, declared the duly elected trustee of the 
district for the school year beginning August 1, 1919. 



The appeal is dismissed. 



In the Matter of the Appeal of Anxe K. IIealy from the Action 
of the Board of Education of the City of Glen Cove, Nassau 
County, N. Y. 

Case No. 488 

(Decided August 26, 1919) 

Removal of teacher — incompetency must be proved — Education Law, sec- 
tion 565 — appeal sustained. 

A teacher cannot be removed for incompetency unless the fact of such 
incompetency is established by a fair preponderance of testimony. Edu- 
cation Law, section 565. Appeal sustained and action of the board of 
education set aside. 

Philip Huntington, attorney for appellant. 

Edward J. Deasy, city attorney, attorney for respondents. 

Finley, Commissioner. — The appellant, Anne K. Healy, is a 

qualified teacher, having a license which authorizes her to teach 

in the public schools in the State of New York. She entered into 

a contract with the board of education of the city of Glen Cove, 

Nassau county, to teach in the schools of such city for the school 

year commencing September 3, 1918, for a term of forty weeks, 

at an annual salary of $700. Pursuant to this contract she 

entered upon the performance of her duties on September 3, 1918. 
Stact Dvt Bbpx.— V<xl 20 19 



194 State Department Eepobts 



[Vol. 20] Education Department 



She continued in the school as a teacher until December 16, 1918. 
She alleges that on that date the board of education of the city 
of Glen Cove dismissed her from her employment and since that 
time has prevented her from performing her part of the contract 
and has failed and refused to pay to her any part of the compensa- 
tion for services to be rendered under such contract after such 
dismissal. 

The attorney for the appellant sought to adjust the controversy 
through the board of education of the city. A final conference 
was held upon the matter on April 6, 1919. After the conference 
the board failed to take favorable action and the attorney advised 
the appellant to proceed by appeal to the Commissioner of Educa- 
tion. This appeal was duly served on the board of education on 
April 12, 1919. The appellant complains that there was no cause 
for dismissal and asks that the action of the board of education 
be set aside. 

The facts and circumstances of this case are peculiar. A situa- 
tion existed in the schools of the city involving charges of immo- 
rality against the superintendent of schools. The appellant was 
a somewhat active factor in initiating and promoting the charges 
against the superintendent of schools. It is not necessary in this 
case to dwell at length upon this matter further than to say that 
it may have had a material bearing upon the action of the board 
in the dismissal of the appellant. The respondent board of educa- 
tion in defending the appeal produced evidence tending to show 
that the appellant was incompetent, in that she was unable to 
maintain order and proper discipline in the schoolroom under her 
charge. She denies forcefully this charge of incompetency. The 
contention on both sides is supported by opposing affidavits. 

The board saw fit to contract with her in due form, whereby 
they agreed to retain her as a teacher for a term of forty weeks 
during the school year commencing September 3, 1918. The 
contract must be deemed to have been made under the provisions 
of the Education Law relating to contracts with teachers, and* 
under it the board of education was bound to retain her in her 
employment for the period therein specified, unless dismissed for 
cause. It is provided in section 565 of the Education Law that 



Mattbb of Ceum 195 



Education Department [Vol. 20] 



" No teacher shall be removed during a term of employment unless 
for neglect of duty, incapacity to teach, immoral conduct, or other 
reason which, when appealed to the commissioner of education, 
shall be held by him sufficient cause for such dismissal." 

A careful examination and consideration of the evidence 
adduced for and against the appellant lead to the conclusion that 
the charges of incompetence were not sustained and that the action 
taken by the respondent board was not justified. It has been 
repeatedly held in appeal cases that a duly licensed teacher may 
not be removed for incompetency unless the fact of such incom- 
petency be established by a fair preponderance of testimony. This 
requirement has not been met in the present case. 

The appeal is sustained. 

It is hereby ordered, That the action of the board of education 
of the city of Glen Cove, taken on December 1G, 1918, dismissing 
Anne K. Healy from her position as teacher in the public schools 
of such city be and the same hereby is set aside, and the said 
board is hereby directed to pay to the said Anne K. Healy the 
compensation due her under her contract from and after the said 
sixteenth day of December to the expiration of the term specified 
in such contract 



In the Matter of the Appeal of Anna C. Ceum, Janb D. 
MaoLallen, Katherine M. Pratt, Eowena H. Sill and 
Iha M. Taylor, from the Action of the Board of Education 
of the City of Glen Cove, Nassau County, in Refusing to 
Retain Them as Teachers in the Schools of Such City 

Case No. 489 

(Decided August 26, 1919) 

Teachers — probationary period — permanent appointment — Education Law, 
section 87a. 

Glen Gove became a city under chapter 787 of the Laws of 1917. The 
contracts with the appellants were made on March 12, 1918. Section 872, 
subdivision 1, of the Education Law (added by chapter 786 of the Laws 



196 State Department Reports 



[Vol. 20] Education Department 



of 1917) provides for a probationary period for teachers of not less than 
one year nor more than three years and by subdivision 3 of said section 
it is provided as follows : " In a city in which teachers have not perma- 
nent tenure under the laws in force prior to the time this act goes into 
effect, such teachers shall be entitled to receive permanent appointments 
after serving the probationary period fixed by the board of education as 
herein provided. 11 Held, that in a city or district where there are no 
probat ionary periods teachers must teach for a period of time equivalent 
to the probationary period, after the taking effect of the law or the incor- 
poration of the city, to entitle them to permanent appointment, and as 
none of the appellants have taught for the prescribed probationary period 
since the city was incorporated they are not entitled to permanent em- 
ployment. Appeals dismissed. 

William Cocks, Jr., attorney for appellants. 

Edward J. Deasy, city attorney, attorney for respondents. 

Finxey, Commissioner. — The appellants herein are teachers 
in the public schools of the city of Glen Cove. Each of the appel- 
lants has brought a separate appeal and separate answers have 
been served and filed therein. The appeals are alike as to subject 
matter and the law which applies. They may properly be dis- 
posed of in one determination. Each of the appellants is a 
qualified teacher, having a license authorizing her to teach in the 
public schools of the State. Miss MacLallen taught in school 
district Xo. 5, town of Oyster Bay, now the city of Glen Cove, 
for the past two years, and the other appellants have taught therein 
for periods of four years or more. They appeal from the refusal 
or failure of the board of education of the city of Glen Cove to 
reappoint them as teachers in the schools of such city for the 
school year of 1919-1920. 

The city of Glen Cove became a city by virtue of chapter 787 
of the Laws of 1917. This act was signed June 8, 1917. Title 7 
of the charter creates the city of Glen Cove as a city school dis- 
trict and provides for the establishment of the department of 
public instruction and the appointment of a board of education. 
The article also prescribes the powers and duties of the board of 
education and the superintendent of schools and provides gen- 
erally for the appointment of teachers, the selection of school- 



Mattbb op Cbum 197 



Education Department [Vol. 20] 



house sites, the erection of buildings, the raising of funds for 
school purposes and for all other matters pertaining to school 
administration in the city. All of the provisions of the charter, 
except those having to do with the referring of its enactment to 
the voters of the proposed city, became effective on January 1, 
1918. Under section 76, the members of the board of education 
in office when the Glen Cove charter took effect continued in office, 
and their successors were to be appointed by the council of the city. 
The board of education, so constituted, was in office at the time 
of the failure of the board to reappoint the appellants as teachers 
in the public schools of the city. 

There is no controversy as to the facts. The board of educa- 
tion either failed or refused to reappoint the appellants as teachers 
in the schools of the city. The one question involved pertains 
to the legal rights of the appellants to reappointment under the 
laws applicable to the tenure of teachers in cities. The appel- 
lants contend that the provisions of subdivision 3 of section 872 
of the Education Law, as added by chapter 786 of the Laws of 
1917, give to them the right of permanent tenure and of con- 
tinuance in their positions "during good behavior and efficient 
and competent services." The respondent board of education 
contends that the appellants were under contract for terms of 
forty weeks during the school year beginning September S', 1918, 
and that upon the expiration of such contracts their rights as 
teachers in the public schools of the city ceased. The contention 
of the respondents is apparently based upon the assumption that 
the city charter, being chapter 787 of the Laws of 1917, and 
enacted subsequent to the amendment of the Education Law, was 
controlling, and that, therefore, the appellants were not entitled 
to hold their positions during good behavior. Under subdivision 2 
of section 82 of the Glen Cove charter, all teachers are to be 
appointed upon the recommendation of the superintendent of 
schools for a probation period of not to exceed two years. The 
contracts with the appellants were made on March 12, 1918, and 
there is no other evidence of their having been appointed as 
teachers. It was evidently the intent that such contracts should 
operate as appointments to the teaching force of the city. The 



198 State Department Reports 

[Vol. 20] Education Department 

appellants have not, under this provision, served for a time equiva- 
lent to the " probation period of not to exceed two years." It is 
apparently conceded that if the city charter controls, the appel- 
lants are not entitled to the remedy which they seek. 

In view of the provisions of subdivision 3 of section 872 of the 
Education Law, as added by chapter 786 of the Laws of 1917, 
it is not essential to determine the question as to whether the city 
charter controls, as against the provisions of chapter 786 of the 
Laws of 1917. Subdivision 1 of section 872 requires the board 
of education to establish a probationary period of not less than 
one year and not to exceed three years. It further provides that 
during the probationary period the services of a person appointed 
as a teacher may be discontinued at any time by the majority 
vote of the board of education. It is provided in subdivision 3 
of section 872 that at the expiration of the probationary period 
the superintendent of schools shall recommend for permanent 
appointment "those persons who have been found competent, 
efficient and satisfactory." It is further provided that such per- 
sons who have served the full probationary period, or have ren- 
dered satisfactorily an equivalent period of service prior to the 
time this act goes into effect, shall hold their respective positions 
during good behavior and efficient and competent service, and 
shall not be removable except for cause, after a hearing, by the 
affirmative vote of a majority of the board. This provision, by 
itself, would give to the appellants the right of teachers who had 
completed the probationary period, since it appears that they were 
in the service prior to the time of the taking effect of the act 
" for an equivalent period of service." 

The provision above referred to is qualified by the last sentence 
of the subdivision which reads as follows : " In a city in which 
teachers have not permanent tenure under the laws in force prior 
to the time this act goes into effect, such teachers shall be entitled 
to receive permanent appointments after serving the probationary 
period fixed by the board of education as herein provided." Under 
this provision teachers in a city or district where there wag no 
probationary period must teach for a period of time equivalent 
to the probationary period, after the taking effect of the law or 



Application of Boaed of Education 199 

Education Department [Vol. 20] 

the incorporation of the city, to entitle them to permanent 
appointment. 

None of the appellants in this case haa taught for the prescribed 
probationary period, since the city was incorporated, and on this 
account they are not entitled to permanent employment under the 
provisions of the so-called City School Law, being chapter 786 
of the Laws of 1917. Not being entitled as of legal right to 
permanent appointment they cannot complain if at the termina- 
tion of their contracts they were not continued in their positions. 

All of the appellants were employed under contracts which 
designated them as teachers. The subsequent designation of the 
appellant, Eowena H. Sill, as supervisor of sewing, does not affect 
her rights in the matter. 

The appeals are dismissed. 



In the Matter of the Application of the Board of Education 
of Union Free School District No. 1 of the Town of 
Union, Broome County, N. Y., for a Decision of the Com- 
missioner of Education of the State of New York that There 
Has Been a Substantial Compliance with the Provisions of the 
Education Law and Ratifying and Confirming the Acts and 
Proceedings of Said Board of Education Relative to the Issu- 
ance and Sale of the Bonds of Said District to the Amount of 
$150,000 

Case No. 490 

(Decided August 28, 1919) 

School district bonds — Education Law, section 480, subdivision 7 — when the 
word " fixtures " will be deemed to mean permanent fixtures — bonds may 
• be issued for permanent fixtures. 

In this proceeding under section 480, subdivision 7, of the Education 
Law, the only question raised is as to the legality of that part of the 
resolution relating to the issuance of the bonds which provides for the 
buying of " the necessary fixtures for said building " and to the expendi- 
ture of moneys raised by the sale of the bonds for this purpose. Held, 
t&at while ordinary school furniture does not constitute a part of the 



200 State Department Reports 

i _ 

[Vol. 20] Education Department 

building, furniture which is built into the walls or otherwise related to 
the building as a permanent fixture is a part of the building and comes 
within the purposes for which bonds may be issued and sold; and the 
term " fixtures " as used in the notice of meeting and resolution in ques- 
tion was intended to cover fixtures permanently attached to the building 
and made a part thereof; and that the bonds are legal and valid obliga- 
tions of the district. 

Leslie H. Baxter, attorney for petitioners. 

Finley, Commissioner. — This proceeding is instituted by the 
board of education of union free school district No. 1 of the town 
of Union, county of Broome, under the provisions of subdivision 7 
of section 480 of the Education Law for the purpose of legalizing 
the issuance and sale of certain school district bonds. 

On April 3, 1919, at a special meeting of said district the 
following resolution was adopted by majority vote of the electors 
present and voting thereat: 

"Resolved, That the Board of Education of Union Free School, 
District No. 1, of the town of Union, Broome County, New York, 
be and is hereby authorized and directed to erect an addition to 
and otherwise alter the Grade School Building located on the 
real property of said District on the corner of Hill avenue and 
Witherill street, in the Village of Endicott, N. Y., in said District 
and to buy the necessary fixtures for said building and to expend 
for such purpose the sum of not more than one hundred fifty 
thousand dollars ($150,000), which said sum shall be raised by 
tax on the taxable property in said District and be collected in 
installments as follows, viz: the sum of five thousand dollars 
($5,000) in each of the years — 1921 to 1942 inclusive, and the 
sum of ten thousand dollars ($10,000) in each of the years 1943, 
1944, 1945, 1946. 

"And that said Board of Education of Said District be and is 
hereby authorized and directed in accordance with the provision 
of Section 480 of the Education Law of the State of New York, 
to borrow on the credit of said District the said sum of one hun- 
dred fifty thousand dollars ($150,000), or so much thereof as may 
be necessary for the purpose above mentioned and issue bonds 



Application op Board of Education 201 

Education Department [VoL 20] 

of said District therefor which shall be a charge upon said Dis- 
trict in the sum of one thousand dollars ($1,000) each, to be 
dated July 1st, 1919, and numbered consecutively from one (1) 
to one hundred fifty (150) inclusive, to be known as "Second 
North Side School Bonds," to bear interest at a rate not exceed- 
ing five (5) per cent per annum, payable as follows, viz: for the 
first five months after the date of said bonds on the first day of 
December, 1919, and annually thereafter on the first day of 
December, on each of said bonds outstanding and unpaid; five 
(5) of said bonds to mature on the first day of December in each 
of the years 1921 to 1912 inclusive, and ten (10) of said bonds 
to mature in each of the years 194t3, 1944, 1945 and 1946. 

" The principal and interest on each of said bonds when due 
to be payable in New York Exchange at the Farmers National 
Bank in the Village of Union, N. Y., and that said Board of 
Education of said District, be and is hereby authorized and 
directed to raise by tax upon the taxable property in said district, 
such sums of money as shall be necessary to pay each and all of 
said bonds as they mature and also to pay any and all interest 
thereon as the same shall become due." 

Sufficient proof has been furnished that the meeting was regu- 
larly called by the board of education and that the notice of 
meeting was duly published as required by law. No question has 
been raised as to the regularity of any of the proceedings relative 
to the holding of such meeting or the sale of the bonds pursuant 
to the resolution adopted thereat, except as to the legality of that 
portion of the resolution which relates to the buying of "the 
necessary fixtures for said building" and to the expenditure of 
moneys raised by the sale of district bonds for such purpose. 

It is provided in section 480, subdivision 1, of the Education 
Law that a board of education is authorized to issue and sell 
district bonds "whenever a tax shall have been voted to be col- 
lected in instalments, for the purpose of building a new school- 
house, or building an addition to a schoolhouse, or making addi- 
tions, alterations or improvements to buildings or structures 
belonging to the district or city, * * *." 

The purposes specified in the resolution, except possibly the 



202 State Department Reports 

[Vol. 20] Education Department 

purchasing of necessary fixtures for the huilding, come strictly 
within the language of said section. It has been held that ordi- 
nary school furniture does not constitute a part of the building; 
but that furniture that is built into the walls or that is otherwise 
so related to the building that it must be treated as a permanent 
fixture properly falls within the purposes for which school district 
bonds may be issued and sold. I think it must be held in this 
case that the term " fixtures/' as employed in the notice of meeting 
and the resolution adopted by the voters, was intended to be used 
in the latter sense and that the resolution, therefore, authorized 
the purchase of such necessary fixtures for the building as will 
be permanently attached to the building and made a part thereof. 
The action of the meeting is not rendered invalid or ineffective 
because of such descriptive term found in the resolution. All of 
the proceedings necessary to the validity of the bond issue have 
been regularly taken and such bonds are legal and valid obliga- 
tions of the district. 

It is hereby ordered, That the acts and proceedings of the 
special district meeting held in union free school district No.l of 
the town of Union, Broome county, on the 3d day of April, 1919, 
authorizing the said board of education of said district to expend 
the sum of $150,000 for the erection of an addition and other- 
wise altering the grade school building located on the real prop- 
erty of said district on the corner of Hill avenue and Witherill 
street in the village of Endicott, N. Y., in said district, and to 
purchase the necessary fixtures for said building and to levy and 
collect a tax therefor to be collected in annual instalments as 
provided in the resolution above recited, and all the acts and pro- 
ceedings of the board of education of such district in issuing and 
selling bonds pursuant to said resolution be and the same hereby 
are ratified and confirmed, and the said board of education is 
hereby ordered to levy a tax upon the taxable property of said 
district in accordance with the terms of said resolution for the 
payment of the principal and interest of such bonds as they 
fall dua 



District Meetings and Election of Trustees 203 



Education Department [Vol. 20] 



In the Matter of the Appeal from the Action of District Meet- 
ings and the Election of Trustees in District No. 5, Town 
of Clinton, Clinton County, X. Y. 

Case No. 491 

(Decided August 28, 1919) 



Election of trustees — notice of special meeting — Education Law, section 197. 

At the annual school meeting held August 3, 1909, a resolution was 
adopted providing in substance that all special meetings should there- 
after be called " by posting notices according to school law." Several 
special meetings were called thereafter by posting notices and vacancies 
in the board of trustees were filled at these meetings. A member of the 
board of trustees claiming that these meetings had been improperly 
called caused notices of a special meeting to be personally served upon 
the voters of the district to fill the vacancies already filled by the pre- 
vious special meetings, and trustees were elected to fill these assumed 
vacancies. Held, that the resolution adopted at the meeting held August 
3, 1909, was valid and binding upon the district and the special meetings 
thereafter called by posting notices were legal and that the trustees 
elected at these special meetings were properly elected. 



Bryant & Lawrence, attorneys for petitioner. 

Finley, Commissioner. — District No. 5 of the town of Clinton 
is a common school district having three trustees. On the 4th 
day of June, 1918, at a school district meeting held pursuant to 
the provisions of chapter 199 of the Laws of 1918, known as the 
Township Repeal Law, the following trustees were elected: 
Thomas F. Looby, for a term of one year ; Harry O'Meara, for a 
term of two years, and P. E. Rushford, for a term of three years. 

In November, 1918, P. E. Rushford died, thereby causing a 
vacancy in said board. A special school meeting was held on 
January 30, 1919, for the purpose of filling the vacancy and 



204 State Department Reports 

[VoL20] Education Department 

1 

Louis Recore was unanimously elected. Early in the month of 
February, 1919, Harry O'Meara resigned his office as trustee 
and a special district meeting was held on February nineteenth 
to elect his successor. Eugene Gibeault was declared elected. 
Each of said special meetings was called by posting of notices in 
the same manner as for the annual meeting. 

Soon after the second special meeting was held Mr. Looby, 
one of the members of the board of trustees, claiming that the 
meetings had been improperly called, assumed to call a third 
special meeting for the purpose of filling the vacancy caused by 
the death of P. E. Rushford, and also the vacancy caused by the 
resignation of Harry O'Meara. The clerk of the district refused 
to serve the notices, but Mr. Looby caused the notices to be per- 
sonally served upon the voters of the district This meeting was 
held on February twenty-eighth and thereupon Mr. Gibeault was 
elected trustee to fill the vacancy caused by the resignation of 
Mr. O'Meara and Mr. Silver was elected to fill the vacancy caused 
by the death of Mr. Rushford. 

At the anmlal meeting held on May 6, 1919, the electors again 
proceeded to elect a full board of trustees, disregarding the action 
taken at the previous special meetings, this time electing Mr. 
Dourkee in place of Mr. O'Meara and Mr. Dumarse in place of 
Mr. Rushford. At this meeting M. D. Ryan appears to have been 
elected for a full term of three years to succeed Mr. Looby, whose 
term expired on August 1, 1919. 

Because of these several meetings and elections it is found that 
several persons claim to hold the same office and that great con- 
fusion and uncertainty exists in the district as to the legal incum- 
bents. The principal question presented by the appellant, Louis 
Recore, is as to the validity of the call of the. special meetings 
held January 30 and February 19, 1919. In each instance the 
notice of meeting was posted but was not personally served. 

It appears that at the annual school meeting held August 3, 
1909, a resolution was adopted, providing, in substance, that all 
special meetings should thereafter be called "by posting notices 
according to School Law," and that said resolution was never 



District Meetings and Election of Trustees 205 

Education Department [Vol. 20] 

rescinded. It further appears that at a special district meeting 
held sonietime during the summer of 1918 a resolution was again 
adopted to the effect that special school meetings should be called 
by posting notices, instead of serving the notices upon the legal 
voters. Under the provisions of section 197 of the Education 
Law the service of a notice of a special meeting in a common 
school district must be personal unless the inhabitants of the dis- 
trict present and voting at an annual meeting shall have adopted 
a resolution prescribing some other mode of giving notice of 
special meetings. When such resolution is adopted at the annual 
district meeting the mode of service prescribed in the resolution 
continues in force until rescinded or modified at a subsequent 
annual meeting, Therefore, the original resolution, prescribing 
the mode of service of notice of special district meetings adopted 
at the annual meeting held August 3, 1909, was valid and binding 
upon the district and special meetings thereafter called by the 
method of posting notices in accordance with the provisions of 
the Education Law were legal. No evidence is presented that 
this method of calling special meetings, adopted by such annual 
meeting, has ever been changed by vote of the district. 

The special meeting held January 30, 1919, must be held to 
have been called in pursuance of such resolution and, since Mr. 
Recore received the unanimous vote of the meeting for trustee 
to fill the vacancy caused by the death of Mr. Rushford, his elec- 
tion was valid and binding upon the district. It must also be 
held that Mr. Gibeault was duly elected at the special district 
meeting held February 19, 1919, to fill the vacancy caused by the 
resignation of Mr. O'Meara. Having been elected to fill the 
unexpired terms of Mr. Kushford and Mr. O'Meara, Mr. Recore 
and Mr. Gibeault were entitled to hold office for the balance of the 
unexpired term for which each was elected. 

The only question which remains is as to whether Mr. Recore 
and Mr. Gibeault, or either of them, have ever resigned from 
office or refused to serve. No such evidence is presented. It is 
alleged that each participated in subsequent meetings at which 
elections were held, but it is evident that such participation was 



206 State Depabtment Repobts 

[Vol. 20] Education Department 

due to a misapprehension as to the legality of the preceding meet- 
ings at which they were elected. 

The appeal is sustained. 

It is hereby ordered, That M. D. Ryan, Louis Recore and 
Eugene Gibeault constitute the duly elected trustees of common 
school district No. 5, town of Clinton, Clinton county, N. Y., 
the said M. D. Ryan to serve for a full term of three years from 
August 1, 1919; the said Louis Recore to serve for the balance 
of the unexpired term of P. E. Rushford, deceased, and the said 
Eugene Gibeault to serve for the balance of the unexpired term 
of Harry O'Meara, resigned. 



ATTORNEY-GENERAL 



In the Matter of Construing the County Law, Section 12 % 
Subdivision 5, Relating to the Salary of County Treasurer 

(Opinion dated May 13, 1919) 

When county treasurer not entitled to fees in addition to his salary. 

A county treasurer, whose salary has been fixed at a stated amount by 
the board of supervisors of his county, iB not entitled to any of the fees, 
percentages or commissions allowed by the different statutes, for receiving 
and paying out moneys, such as State, school, transfer, bank and excise 
taxes, etc., as the salary paid by the county must be treated as his sole 
compensation for such work. 

R. L. Edmonds, chairman of the board of supervisors of Yates 
county, N. Y., submitted an inquiry, together with a request for 
an opinion thereon, as follows : 

"Is a county treasurer, whose salary has been fixed by the 
board of supervisors at a certain amount per annum, entitled 
to fees fixed by several statutes for receiving and disbursing the 
moneys referred to in such statutes, in addition to the salary so 
fixed by the board ? " 

Newton, Attorney-General, by J. L. Cheney, First Deputy. — 
It appears "by an inquiry from the chairman of the board of 
supervisors of the county of Yates, that on the 29th day of July, 
1918, the board of supervisors of that county fixed the salary of 
the county treasurer under the following resolution: 

" Resolved, That the salary of the County Treasurer be fixed 
at seven hundred dollars, ($700.00), per year, including office 
rent." 

It is also stated -that when the resolution was passed it was 
the intent of the board that the treasurer should have the fees 
as part of his salary in addition to the above-mentioned amount 
of $700, and I am requested to advise how the matter can be 

207 



208 State Department Repoets 

[Vol. 20] Attorney-General 

arranged at this time to enable the county treasurer to retain 
the fees and percentages allowed by law for receiving and dis- 
bursing State, school and other moneys in addition to his salary 
of $700. 

It is provided by subdivision 5 of section 12 of the County 
Law that the board of supervisors should have the power to fix 
the amount, time and manner of payment of the salary or com- 
pensation of any county officer or employee, except a judicial 
officer or an officer or employee of a county tuberculosis hospital, 
"notwithstanding the provisions of any general or special law 
fixing the amount of such salary or compensation * * * and 
the power hereby vested in the board of supervisors shall be 
exclusive of any other board, body, commission or officer, except 
the authorities of a county tuberculosis hospital, notwithstanding 
any general or special law. The salary or compensation of an 
officer or employee elected or appointed for a definite term 
shall not be increased or diminished during such term." It was 
pursuant to this general law that the salary in question was 
fixed. 

The authority was first vested in boards of supervisors to fix 
the salaries of county officers, by chapter 482 of the Laws of 
1875, and amended by chapter 436 of the Laws of 1877. It is 
provided by section 5 thereof as follows: 

"§ 5. Every county treasurer hereafter elected or appointed 
shall receive as compensation for his services an annual salary, 
to be fixed by the board of supervisors. He shall not receive 
to his use any interest, fees or other compensation for his serv- 
ices, except in proceedings for the sale of lands for unpaid taxes 
as may be now provided for by law. It shall be the duty of said 
board to fix the salary of any treasurer hereafter elected at least 
six months before his election, and such salary shall not be 
increased nor diminished during his term of office ; and no county 
treasurer shall purchase or be directly or indirectly interested in 
any purchase of any claim whatever against the county of which 
he is the treasurer." 

It will be observed from the above quotation that the salary 



CotfSTRTXCTTOK OF CoUWTT Law, SeC. 12, SUBDIVISION 5 809 

Attorney-Gteneral [Vol. 20] 



fixed by the board was to be in full for all of his services as 
county treasurer "except in proceedings for the sale of land for 
unpaid taxes " and that he was prohibited thereby " from receiv- 
ing any interest, fees or other compensation " for his own use. 

By chapter 686 of the Laws of 1892 (known as the County 
Law) the last above-mentioned act was repealed and the follow- 
ing provision was substituted in place thereof, being subdivision 
5 of section 12, to wit : 

"5. Fix the salaries and compensation of county treasurers, 
district attorneys and superintendents of the poor of their county, 
which shall be a county charge, and not be changed during the 
term of any such officer; and prescribe the mode of appoint- 
ment, and fix the number, grade and pay of the clerks, assistants 
and employees in such offices, when not otherwise fixed by law, 
which shall be a county charge." 

This was amended by chapter 359 of' the Laws of 1911 in 
substantially its present form as hereinbefore outlined. The 
statute was also amended in 1913 and 1914, but such amend- 
ments are not material in the consideration of the question 
involved in this inquiry. 

The right of a county treasurer to retain fees in addition to 

his salary as fixed by the board of supervisors, was before the 

Court of Appeals in 1890 (Supervisor v. Jones, 119 N. Y. 339) 

under the statute of 1877, and the court held that the salary 

fixed by the board was the only compensation to which the 

treasurer was entitled and at page 343 the court, in speaking of 

the claim made by the county treasurer for certain fees in 

addition to his salary, made use of the following language: 

" The chief ground of his contention is that the act of June, 1881, 

does not in express terms forbid the receipt of fees by the county 

treasurer or repeal by implication the laws under which, before 

1877, the county treasurers were entitled to receive them. But 

I think that is a very narrow interpretation and more nioe than 

wise. If the statute of June, 1881, stood alone, it would, by 

the force of its own terms, substitute an annual salary for fees. 

When it declares that the county treasurer shall receive, 'as 
State Dept. Rett. — Vol. 20 14 



ild State Department Reports 



[Vol. 20] Attorney-General 



compensation for his services/ an annual salary, it very plainly 
implies that such salary is to be his sole and only reward. ' For 
his services ' means for all his services, for the entire and com- 
plete performance of his official duties, and a specific compensa- 
tion awarded for those services implies the full and entire com- 
pensation to which he is entitled. But this natural interpretation 
of the language becomes conclusive when the statute is read in 
connection with the legislation on . the same subject The act 
of 1877 defined the phrase ' as compensation for his services ' so 
fully and explicitly as to leave no possible room for doubt. The 
later legislation on the same subject repeats the phrase, which 
must retain the meaning attached and not bear a new and 
different one. The inference from the statutes read together, 
and in the light of the evil they were intended to remedy, 
becomes irresistible." 

The same subject was again considered by the Court of Appeals 
after the adoption of chapter 686 of the Laws of 1892, known 
as the "County Law" which contained substantially the same 
provision as to salaries of county officers as the act hereinbefore 
partially quoted in the caae of People ex rel. Conine v. Steuben 
County, 183 N. T. 114; and at page 121 Judge Haight said: 
"It is possible that under the County Law all treasurers were 
intended to be made salaried officers except those provided for 
by special laws. But this question we do not deem it necessary 
to now determine, for we are clear that in the revision of the 
statute it was intended that the counties of the state in which 
the treasurers were salaried officers under general laws should 
be continued as such under the County Law, and that the salary 
and compensation which the board of supervisors was required 
to provide for them were intended to be in full of all compen- 
sation allowed them for every official duty pertaining to their 
office, including their services for the collecting and paying over 
the state, school and court moneys." 

It was held by Attorney-General Carmody, Report of 1911, 
page 396, that a salaried county treasurer had no right to the 
fees mentioned in the statutes for receiving and paying out the 



CoWSTBUCTIOff OF CoUTTTY Law, Sec. 12, SUBDIVISION 5 211 

Attorney-General [Vol. 20] 

State and school moneys, but was entitled to the expenses which 
he incurred under the provisions of the Mortgage Tax Law. 

A somewhat similar question was again considered by Attor- 
ney-General Carmody in 1912 (Report of 1912, p. 258), and he 
therein held that a county treasurer whose salary had been fixed 
by the board of supervisors " at the sum of $1,500 and in addi- 
tion all fees allowed by law " was not entitled to retain any fees 
or percentages for receiving and paying out bank taxes, court 
and trust funds as specified in section 3321 of the Code of Civil 
Procedure. He also held that the county treasurer was entitled 
to retain the fees allowed to county treasurers by section 11 of 
the Liquor Tax Law and section 237 of the Transfer Tax Law in 
addition to the salary fixed by the board of supervisors, upon the 
theory that the work required of county treasurers under those 
two acts had been added to the work and duties of such treasurer 
subsequent to the time his salary was fixed by the board, and that 
such work had not been taken into consideration at the time his 
salary was so fixed. The opinion of Attorney-General Carmody 
followed the opinion of Judge Kellogg at Special Term in the case 
of Montgomery v. Vosburgh, 74 Misc. Rep. 562, rendered in 
December, 1911, but the reason advanced by Attorney-General 
Carmody and the Special Term cannot be applied to those treas- 
urers whose salaries have been fixed since the amendment of sub- 
division 5 of section 12 of the County Law in 1911, which has pro- 
vided since that time that the board of supervisors shall fix the 
salary and compensation of the county treasurer as well as other 
county officers, " notwithstanding the provisions of any general or 
special law fixing the amount of such salary or compensation." It 
must be borne in mind that the fees of county treasurers provided 
by the Taxable Transfer Tax Law and the Liquor Tax Law were 
both enacted orignally in 1896, and were both upon the statute 
books at the time of the amendment of subdivision 5 of section 12 
of the County Law in 1911, and presumably were taken into con- 
sideration at the time such amendment was made. It seems to 
have been the plain intent of the Legislature to vest the exclu- 
sive authority in the boards of supervisors to fix the salaries of 



212 State Depakt mj ut Rsposrf 

[Vol. 20] Attorney-General 

the county treasurers as well aa other county officers, and that the 
salaries so fixed should be the sole compensation of such officers 
notwithstanding the provisions of any general or special law, 
which might provide for specific compensation for some par- 
ticular branch of the work of such officer. I am unable to find 
any case since the amendment to the County Law in 1911 where 
the above subsection of the County Law was considered except in 
the opinion of Attorney-General Carmody, supra, but that opinion 
was based somewhat upon the authority in the case of Montgomery 
v. Vosburgh 74 Misc. Rep. 562. In this latter opinion, which 
was rendered after the enactment of the above-mentioned sub- 
section of the County Law, it was not referred to and apparently 
was not considered by Judge Kellogg. It will be observed that the 
percentages referred to in section 11 of the Liquor Tax Law 
and section 237 of the Transfer Tax Law, were allowed to them 
by acts of 1896 (prior to the change in the County Law) as 
compensation for work under such respective acts in addition 
to the salary or fees then allowed to them by law. By the 
amendment of the County Law in 1911 the Legislature pro- 
vided that the boards of supervisors should fix the salary and 
compensation of such officer and that the salary so fixed should 
be his entire compensation and salary, "notwithstanding the 
provisions of any general or special law fixing the amount of such 
salary or compensation," so I take it that the special provisions 
hereinbefore referred to were repealed by implication by the 
amendment to the County Law in 1911, in all counties where 
the treasurer is a salaried officer. 

I therefore conclude that the salary fixed by the board of super- 
visors of Yates county at $700 per year and office rent, must be 
treated as his full compensation for all services rendered by him 
as county treasurer during his present term. 

I am further requested to advise the Board as to how it can 
be now arranged so as to allow the treasurer an amount that will 
be equal to the fees which the board supposed he would be 
entitled to at the time the salary was fixed, in addition to the 
above-mentioned sum of $700. I do not think it would be proper 



CONSTKUOTIOW OF TlUDINO WITH THE ENEMY Act, § 7 213 



Attorney-General [Vol. 20] 



or legal for the board to attempt to raise the salary during his 
present term as such action would be violative of section 28 of 
article III of the Constitution, which prohibits a board of super- 
visors from granting any extra compensation to any public 
officer, and also of the last sentence of subdivision 5 of section 
12 of the County Law, which provides that the salary or com* 
pensation of a county officer shall not be increased or diminished 
during his term of office. While I appreciate the fact that this 
opinion will entail some loss upon the treasurer, which it would 
give much satisfaction to save him from, if I could consistently 
do so, still I must decline to make any suggestion as to how the 
difficulty can be remedied, if at all. 



In the Matter of Constbuino Section 7, o of the Tkadino 

With the Enemy Act 

(Opinion dated May 13, 1919) 

A " demand " or " requirement " made pursuant to section 7, c of the 
Trading With the Enemy Act is a conveyance and subject to record. 

In response to an inquiry concerning the Trading With the 
Enemy Act, the following reply was transmitted : 

Newton, Attorney-General. — A " demand n or " requirement " 
made pursuant to section 7, c of the Trading With the Enemy 
Act, with respect to real estate, is a conveyance within the 
meaning of that term as defined in section 290 of our Real Prop- 
erty Law, for it undoubtedly transfers an interest and affects the 
title to real property. As such conveyance it is subject to record 
in the office of the recording officer of the county in which the land 
is situated, provided it is authenticated in such way as to make 
it acceptable for record. 

It must be obvious to you that a "demand," signed by the 
Alien Property Custodian or by one of his deputies or clerks in 
his name, could hardly be accepted without some authentication. 
It constitutes a conveyance of real property, and nobody would 
be expected to accept it without some evidence of the genuineness 
of the signature. 



214 State Department Reports 



[Vol. 20] Attorney-General 

*- 

If the Alien Property Custodian had an official seal, I would 
be inclined to hold that his act, authenticated by his seal, must 
be accepted for record. But I find nothing in the Trading With 
the Enemy Act creating a seal of office for the Alien Property 
Custodian. In the absence of a seal, however, it seems to me 
that authentication should be in the manner provided in the 
Real Property Law. 

Under the Trading With the Enemy Act the custodian can 
undoubtedly compel a recording officer, by mandamus, to record 
a a demand." But in order to get his " demand " in evidence 
in the courts he will have to authenticate it. And the order of 
the court will be a further authentication. The courts are not 
familiar with the custodian's signature, and will not take judicial 
notice of it. And a recording officer cannot. 

You will easily see the mischief that might be caused by any 
other ruling, were it possible. Any person wishing to put a cloud 
on the title of another's land could make out a " demand " signed 
in the name of the custodian, and, without any proof of the 
validity of the signature or his authority get it recorded by merely 
representing himself as a messenger or by mailing it to the record- 
ing officer with the. required fee. 

I suggest that the custodian appoint deputies with power to 
execute "demands" and that they sign and acknowledge them 
as such deputies before presenting them for record. 



In the Matter of Construing the Military Law, Article III, 
Naval Appropriation Acts of August 29, 1916 and July 
1, 1918, Relative to the Naval Militia, National Naval Volun- 
teers, The Naval Reserve 

(Opinion dated .May 22, 1919) 

The transfer by the President, under the Naval Appropriation Act of 
July 1, 1918, of the National Naval Volunteers to the Naval Reserve, 
did not affect the status of any members of the Naval Militia who were 
in the National Naval Volunteers, except as active duties in the Naval 
Reserve might interfere with active duties in the Naval Militia, 



Construction of Military Law, Article III 215 

Attorney-General [Vol. 20] 

Hon. Charles W. Berry, Adjutant-General, submitted an 
inquiry, together with a request for an opinion thereon, as follows: 

"Did the transfer by the President of the National Naval 
Volunteers to the Naval Reserve have the effect of discharging 
from the Naval Militia, members of the National Naval Volun- 
teers who were also officers or enlisted men in the Naval Militia t " 

Newton, Attorney-General, by J. L. Cheney, First Deputy. — 
In 1916, when it became evident that the United States govern- 
ment might desire to use the trained members of the militia 
outside of the national borders, the constitutional provision for 
the calling forth of the Militia in Federal service (U. S. Const 
I, viii, 15) which only provides for its use to execute the laws 
of the- Union, suppress insurrections, and repel invasions, was 
seen to be preventive of the use of the Militia, as such, in foreign 
wars. To make the members of the Militia available in foreign 
wars, provision was made in the National Defense Act (§ 111) for 
the draft into the Army of the United States of the members of 
the National Guard, by the President on the authorization of 
Congress. Most of the members of the National Guard had 
already taken an oath of allegiance to the United States and of 
obedience to the orders of the President, but those who had not 
were required to do so, or were discharged, when the Militia was 
called out by the President in the summer of 1916. The contracts 
of military service between members of the National Guard 
and the State were in this way made subject to the rights of the 
United States. The right was reserved in the United States to 
draft into the Army, all or any members of the National Guard, 
who, when drafted should stand " discharged from the Militia." 
Nat. Def. Act, § 111. Those members of the National Guard who 
were drafted into the Federal Army in July- August, 1917, stood 
discharged from the Militia. 

But the situation in the Naval Militia was different. The 
National Defense Act did not provide for the draft into the 
Navy of the members of the Naval Militia. And at no time during 
the recent war was the Navy recruited by draft. And no Federal 



816 State Department Reports 

A 



[Vol. 20] Attorney-General 



law has provided for the discharge from the Militia of memhers 
of the Naval Militia, upon their heing used as a part of the 
United States Navy. 

Provisions for the enlargement of the Navy was made by the 
Naval Appropriation Act of August 29, 1916, including the Naval 
Reserve and the National Naval Volunteers. The members of 
Naval Militia were seen to be desirable as a part of the enlarged 
Navy, and it was provided that members thereof might be enrolled 
voluntarily as members of the National Naval Volunteers. If 
necessary the President might draft into the National Naval 
Volunteers, those members of the Naval Militia who were not 
voluntarily enrolled. 39 Stat. 596. Such draft was never neces- 
sary — they practically all voluntarily enrolled. The act did not 
provide, as did the National Defense Act, for the discharge from 
the Militia of men drafted under its provisions. To take care of 
any situation that might arise through conflict of State and Fed- 
eral duties, it was provided that " Every person enrolled in said 
Volunteers shall, from the date of the call of the President, and 
during the continuance of his active service under said call, stand 
relieved from all duty as a member of the Naval Militia. 39 Stat. 
596. Congress was careful not to discharge these men from the 
Militia, but merely to relieve them from duty to the State while 
in the National service. 

Existing Federal law prohibited certain officers of the United 
States Naval forces from employment in other capacities. Some of 
them were disqualified from holding office under the State govern- 
ment. The disadvantage of this to men in reserve forces was 
seen, and by the same Naval Appropriation Act of August 29, 
1916, it was provided with respect to the Naval Reserve: "No 
existing law shall be construed to prevent any member of the 
Naval Reserve Force from accepting employment in any branch 
of the public service, except as an officer or enlisted man in any 
branch of the military service of the United States or any State 
thereof, nor from receiving the pay and allowances incident to 
such employment in addition to his retainer pay." 39 Stat. 588. 
It should be noted that this imposed no new prohibition against 



CoNSTEUCTION OF MlLITAEY I/AW, ARTICLE III 217 

» 

Attorney-General [Vol. 20] 

members of the Naval Keserve being employed in state military 
forces, but merely left existing statutes alone as far as they might 
have that effect. This did not prevent members of the National 
Naval Volunteers from remaining members of the Naval Militia 
of a State — that situation having been specifically taken care 
of in the language of the same act previously quoted. Members 
of the National Volunteers remained members of the Naval 
Militia, being merely relieved of duty in the latter capacity while 
in active service in the former. 

It later developed that it would be advantageous to have the 
National Naval Volunteers a part of the Naval Reserve, and the 
question was raised as to the status of a member of the Naval 
Militia becoming a member of the Naval Reserve, who might be 
prohibited by the statutes from being a member of the Naval 
Reserve and simultaneously employed in the military service of 
a State. 

On behalf of men who desired to serve in the Naval Reserve 
but who realized that active duty in that branch might be rare, 
and who wished to continue their regular drill and connection 
with the Naval Militia, it was urged upon Congress that it should 
be made possible for the National Naval Volunteers, consisting 
of members of the Naval Militia, to be transferred to the Naval 
Reserve, without being driven out of the Naval Militia. Accord- 
ingly by the Naval Appropriation Act of July 1, 1918 it was 
provided that " all laws heretofore enacted * * * relating to 
the Naval Militia and the National Naval Volunteers be * * * 
repealed; and the President is authorized to transfer as a class 
all members of the National Naval Volunteers to the class ' The 
Naval Reserve ' * * * for general service * * * regardless 
of their being members of the State military force. * * *." 
40 Stat. 

It is perfectly clear to me that Congress, in using the words 
"regardless of their being members of a State military force" 
intended to leave the status of these men in the Naval Militia of 
the States unchanged. Had it intended to change the relation of 
these men to their State military forces — to discharge them from 



218 State Department Reports 

[Vol. 20] Attorney-General 

the State Militia — it would have said so. It well knew how to 
employ unambiguous phraseology for such a purpose. Entirely 
aside from the history of the situation, the difference between the 
phraseology of the act of 1918 : " regardless of their being members 
of a State military force " and that of the National Defense Act : 
" shall thereupon stand discharged from the militia," clearly indi- 
cates a different intent in each of the two acts. The difference 
indicates clearly that it was not the intent of Congress that the 
Naval Militia should be treated the same as the National Guard. 
The distinction, begun in the National Defense Act, was carried 
through. The members of the Naval Militia were not subject 
under the National Defense Act, as were the National Guard 
members, to draft into Federal service. When they were admitted 
under the Naval Appropriation Act of 1916 to membership in 
the National Naval Volunteers, it was without effect upon their 
status as members of the Naval Militia. (And if it had become 
necessary to draft any of them into the National Naval Volunteers, 
they would have been drafted without losing their status as mem- 
bers of the Naval Militia.) And when they were transferred to 
the Naval Reserve, it was " regardless of their being members of 
a State military force " — meaning the same thing. 

By the National Defense Act the members of the National 
Guard and the States were subjected to the termination of the 

contract between man and State by a discharge, specifically named 
as such, upon a particularized " draft " into the Army. But this 

was not provided for the Naval Militia in any one of the statutes. 

The word " discharge," the obvious one to express a similar intent, 

was avoided, and the relations between the men and the State 

were left untouched. 

The purpose — the only possible purpose — of the words 

" regardless of their being members of a State military force," 

was to repeal pro tamio the statutes making it impossible for a 

member of the Naval Reserve to hold employment in State military 

service. If the intent had been otherwise and had Congress 

intended all members of the Naval Militia so transferred to 

stand discharged from the Naval Militia, it would have said so, 



Construction of Military Law, Article III 219 



Attorney-General [Vol. 20] 



and it would have been necessary to say so — for the language of 
the Naval Appropriation Act of 1916, together with the transfer 
to the Naval Keserve, would not bring about the same result. The 
language of the 1916 act carried no affirmative prohibition. It 
merely modified the prohibitions contained in pre-existing statutes. 
And as far as I can discover the pre-existing statutes would have 
had the effect of preventing such dual service in the case of only 
a small part of the members of the Naval Militia. If Congress 
wanted these men discharged from the Naval Militia, it would 
have provided for the discharge of all of them by definite language, 
and not for leaving some alone and discharging others, through 
the operation of pre-existing statutes of various application. 

I have before me an indorsement from the office of the Judge 
Advocate General of the Navy dated 6 February, 1919, addressed 
to the Chief of the Bureau of Navigation upon the " Status of 
members of Naval Militia after release from active duty as mem- 
bers of the Naval Reserve Force," in which it is stated : 

" Second. That all members of the Naval Militia who became 
members of the National Naval Volunteers by virtue of the Act 
of 29 August, 1916, and were thereafter transferred to the Naval 
Reserve Force by the President under the Act of 1 July, 1918, 
were thereby discharged from the Naval Militia of the State or 
the District of Columbia in which they were originally enrolled." 

With all deference to the opinion of the learned Judge Advocate 
who prepared this indorsement I think that he must have over- 
looked the absolute difference in phraseology between the language 
of the National Defense Act (which he does not cite) and the 
naval act of July 1, 1918, and that he must have overlooked the 
history of the situation ; and for these reasons as well as for those 
set forth above, I am constrained to disagree with him. 



220 State Department Reports 



[Vol. 20] Attorney-General 



In the Matter of Construing the General Business Law, Sec- 
tion 13 and Public Officers Law, Section 3, Relative to 
County Sealers of Weights and Measures 

(Opinion dated May 27, 1919) 

A county sealer of weights and measures should be a resident of that 
part of the county not included in a city. 

The Board of Supervisors of Ulster county submitted an 
inquiry, together with a request for an opinion thereon, as 
follows : 

" Is a resident of the city of Kingston eligible for the office 
of county sealer of weights and measures for Ulster county — 
his jurisdiction not extending into the city, and his salary and 
expenses being levied and assessed against that portion of the 
county outside of the city?" 

Newton, Attorney-General, by J. L. Cheney, First Deputy. — 
The jurisdiction of a county sealer of weights and measures is 
restricted to the territory of his county outside of the cities. 
Opinion Atty. Gen. 1910, p. 929. 

Section 3 of the Public Officers Law provides: "No person 
shall be capable of holding a civil office who shall not, at the 
time he shall be chosen thereto, be of full age, a citizen of the 
United States, a resident of the state, and if it be a local office, 
a resident of the political subdivision or municipal corporation 
of the state for which he shall be chosen, or within which the 
electors electing him reside, or within which his official functions 
are required to be exercised/' 

The county sealer, though having the word " county " as part 
of his title is chosen for that part of the county outside of the 
cities — that is, the towns. Town sealers, formerly provided for, 
were abolished in 1910 (Laws of 1910, chap. 187) and now the 
county sealer performs their functions. I think that the towns 
taken together form pro hac vice a political subdivision of the 



CoNSTnucnoir of Tax Law, Article 16 221 



Attorney-General [Vol. 20] 



State, and it is certainly for this subdivision and not for the 
whole county (inclusive of cities) that the county sealer is chosen, 
and it is exclusively within this subdivision that his official 
functions are exercised. 

The situation is similar to that which was before Attorney- 
General Hancock when he held that school commissioners, whose 
districts excluded the cities surrounded by them, should not be 
residents of cities. He held that the school commissioner dis- 
tricts were political subdivisions, and that their officers should 
be chosen from them. Opinion Atty. Gen. 1896, p. 201. 

I am satisfied that a resident of a city should not be chosen to 
the office of county sealer of weights and measures. 



In the Matter of Construing Section 359, Subdivision 3 of 
Abticlb 16 of the Tax Law, Added by Chapter 627 of the 
Laws of 1919, as to Nonresidents 

(Opinion dated May 29, 1019) 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning nonresidents, the following reply was 
transmitted : 

Newton, Attorney-General, by James S. T. Ivtnb, Deputy. — 
As requested orally by you, I have considered the question arising 
under article XVI of the Tax Law : 

What are "sources within the State " under section 359, 
subdivision 3 ? 

" Sources [of income] within the State " obviously includes 
rents for the use of property in the State, profits of commerce car- 
ried on in the State, and so forth. The only doubt seems to arise 
with respect to payments made by a resident of the State or a 
concern doing business here, for services rendered which are 



222 State Depaetment Bepobts 



[Vol. 20] Attorney-General 



actually performed outside of the State but inure to the benefit 
of someone within it or are paid for in the State or by remittance 
therefrom. 

It seems to me that the work done, rather than the person 
paying for it, should be regarded as the " source " of income. 
It would follow that payments, wherever and by whomever made, 
for services performed without the State are not taxable against 
nonresidents and payments wherever and by whomever made, for 
services performed within the State are taxable against nonresi- 
dents. For similar rule under Federal Income Tax Law, see 
Treasury Dept. Regulations 45, Art. 92. 

Where services are rendered partially within and partially 
without the State, the income therefrom should be divided pro 
rata into income from sources within and without the State. I 
think the Comptroller should make a rule fixing the methods of 
prorating. 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Withholding 
Agents 

(Opinion' dated May 29, 1919) 

On incomes of $10,000 or less not more than 1 per cent should he 
withheld. On incomes between $10,000 and $50,000, 2 per cent should be 
withheld. On incomes over $50,000, 2 per cent should be withheld and 
the balance of 1 per cent should be collected directly from the taxpayer. 
Taxes are to be computed from January 1, 1919, and withholding agents 
should where possible after May 14, 1919, withhold a sufficient amount 
to pay the whole tax. 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning withholding agents, the following reply 
was transmitted: 

Newton, Attorney-General, by James S. Y. Ivins, Deputy. — 
As requested by you orally, I have considered three questions aris- 
ing with respect to withholding agents under article XVI of the. 



- -^i 



OoffSTBucTiotf of Tax Law, Abticle 16 223 

Attorney-General [Vol. 20] 

Tax Law as added by chapter 627 of the Laws of 1919, imposing 
taxes on personal incomes. 

1. What deductions from salaries, wages, etc., should be made 
by "withholding agents" under section 366? 

As this chapter was originally drafted, it provided for a 2 per 
cent basis for the income tax, regardless of the amount of the tax- 
payer's total income. 1919, Senate bill printed No. 1427. In the 
last days of the Legislative session the bill was amended to provide 
for progressive rates of taxation — 1 per cent on the amount of 
net income not exceeding $10,000; 2 per cent on net income 
between $10,000 and $50,000; and 3 per cent on net income in 
excess of $50,000, § 351. In the haste of hurried amendment the 
framers of the bill overlooked the provisions of section 366 and 
neglected to make corresponding changes, so the 1st subdivision of 
that section as enacted provides that " every withholding agent 
shall deduct and withhold two per cent," etc. — no distinction 
being made between the three classes of income. 

If it were not for the phraseology of other subdivisions of sec- 
tion 366, the 1st subdivision might make it unavoidably incum- 
bent upon a withholding agent to withhold 2 per cent in every 
case, even where the tax payable to the State is only 1 per cent 
But the phraseology of subdivisions 3, 4 and 5 is such as to make 
the requirement that 2 per cent be withheld purely technical, and 
unenforceable to the extent of more than 1 per cent in cases 
where the net income is $10,000 or less. Subdivision 1 requires 
the withholding of 2 per cent of determinable annual or periodical 
income taxable under this article. Section 351 makes incomes of 
$10,000 or less taxable at only 1 per cent. Subdivision 3 of sec- 
tion 366 requires the withholding agent to make return and pay 
a the tax " to the Comptroller. Where the tax is only 1 per cent, 
that is all that need be paid to the Comptroller. The penalty for 
failure to withhold is merely a liability to pay the tax, with 
penalties, if it be not paid by the recipient of the income. So 
in case of an income of $10,000 or less, the withholding agent is 
protected against claim by the State if he pays 1 per cent to the 
Comptroller — and there can be no object in his withholding or 
paying more. Further, the withholding agent is only indemnified 



224 Stats Dxpabtmbitt Reports 



[Vol. 20] Attorney-General 



against claims by the recipient of income to the extent of payments 
made (not amounts withheld) in accordance with the provisions 
of the section, and the only payments provided for are payments 
of the tax. It would follow that if more be withheld than is 
required to pay the tax, the withholding agent will be liable to 
the recipient of the income for the balance. And the recipient 
would probably enforce his claim for such balance, since he will 
only be credited (under subdivision 4} on making his own return 
with the amount of the tax so withheld. Also it is provided in 
subdivision 5 that if the recipient pay his own tax on the amount 
received, it shall not be recollected (by the Comptroller) from the 
withholding agent. 

I am therefore of the opinion that the Comptroller may advise 
withholding agents against withholding more than 1 per cent on 
incomes of $10,000 or less. 

Where the net income is between $10,000 and $50,000, the 
withholding agent should withhold and pay to the Comptroller 
2 per cent. 

In the cases, probably rare, where the net income of a taxpayer, 
for whom a withholding agent must make return, is over $50,000, 
and the tax rate is 3 per cent, owing to the inconsistency of the 
statute, the withholding agent is only authorized and required to 
withhold 2 per cent, and it will be incumbent upon the Comp- 
troller to collect the balance directly from the taxpayer. 

2. Should a withholding agent withhold moneys and make 
returns with respect to payments made or accrued prior to the 
enactment of this chapter (May 14, 1919) ? 

Section 351 provides: " * * * Such tax shall first be levied, 
collected and paid in the year nineteen hundred and twenty upon 
and with respect to the taxable income for the calendar 'year nine- 
teen hundred and nineteen, or for any taxable year ending during 
the year nineteen hundred and nineteen." 

Sections 353, 355, 360, paragraph 9, provide that for ascertain- 
ing gain, loss and depletion in value of property acquired before 
January 1, 1919, its value on that date shall be considered. 

Section 370 provides that where a taxpayer making his first 



Construction of Tax Law, Abticlb 16 225 

Attorney-General [Vol. 20] 

return keeps his accounts on the basis of a fiscal year he shall 
make a separate return (on which his tax is computed) for the 
period between the beginning of the calendar year in which such 
fiscal year ends and the end of such fiscal year. 

Prom these provisions it appears that the legislative intent was 
to make the law retroactive to January 1, 1919. Taxes under 
it will be computed on all income after that date. Returns of 
taxpayers must be made for periods beginning on that date. 
There is nothing in section 366 or elsewhere to indicate a dif- 
ferent intent with respect to returns or payments by withholding 
agents. While an employer cannot withhold anything now from 
the salary of an employee who left his service before May four- 
teenth, having received over $1,000 since January first, and can- 
not be made liable to pay a tax on a salary paid to such a person, 
it is perfectly practicable for an employer to withhold from future 
payments to an employee enough to pay the tax on payments made 
between January first and May fourteenth; and this is no more 
unreasonable than to require the recipient to pay a tax on what 
he received and may have spent between those dates. 

I think the Legislature intended that withholding agents should 
make return between January 1, and March 15, 1920, for pay- 
ments made during the entire period from January 1, 1919, to 
the end of the calendar or fiscal year, and should pay to the 
Comptroller the tax thereon for the full period in all cases where 
it was possible after May 14, 1919, to withhold enough to pay 
the tax. 

And I think the Comptroller will be quite justified in making a 
rule to this effect under section 383. 

3. At what times and in what amounts should a withholding 
agent withhold moneys ? 

While the act evidently contemplates that usually the withhold- 
ing agent will withhold a fixed percentage from each periodical 
payment, no definite requirement to that effect is made. And of 
course such procedure is not possible with respect to payments 
made between January 1, and May 14, 1919. It is left to the 
convenience of the withholding agent, and he will satisfy the 

requirements of the statute if he pays the tax when it falls due, 
Bute Dipt. Kept.— Vol. 20 15 



226 State Department Reports 

[Vol. 20] Attorney -General 

and makes proper return of information. To protect himself 
a withholding agent should, before the end of a fiscal or calendar 
year, withhold sufficient to pay the tax when it falls due. If 
he fails to do this he will have a balance to make up under the 
provision which makes him liable for the tax. Section 366, para- 
graph 3. Generally it will be safer for a withholding agent to 
withhold as he goes — for to rely upon withholding from future 
payments to pay the tax on past payments may result, in case 
for instance of the termination of an employment, in the expected 
future payment never accruing; and to withhold in advance for 
taxes expected to accrue may lead him into a situation where 
the prospective tax never accrues and he finds himself in possess 
sion of moneys which he cannot justify withholding. 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Withholding 
Agents 

(Opinion dated May 29, 1919) 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning withholding agents, the following reply 
was transmitted: 

Newton, Attorney-General, by James S. Y. Ivins, Deputy. — 

As requested orally, I have considered the following question 
raised under section 366 of the Tax Law: 

1. Should a withholding agent withhold anything for the first 
$1,000 paid by him to a recipient of income? 

The tax is payable on the entire net income, in the case of 
nonresidents. There is no duty upon the withholding agent to 
withhold or pay, or to make return, unless the amount paid to 
the recipient of income is $1,000 or over. But as soon as it 
reaches that amount, the duty is imposed to withhold, pay, and 
make return on the basis of all salaries, wages, etc. When the 
amount expected to be paid to a recipient of income during the 



Construction of Tax Law, Article 16 227 



Attorney-General [Vol. 20] 



year is over $1,000, it would seem to be a matter of choice on 
the part of the withholding agent, whether he will withhold from 
every payment as he goes along, wait until $1,000 has been paid 
and then withhold for all past payments, or adopt some other 
scheme. The arguments under question 3 in my Income Tax 
Letter No. 1 to you, dated May 29, 1919 (20 State Dept Bep. 
222), apply equally to this situation. 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Withholding 
Agents 

(Opinion dated June 2, 1019) 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning withholding agents, the following reply 
was transmitted: 

. Newton, Attorney-General, by James S. T. Ivins, Deputy. — 
In accordance with your oral request, I have considered the 
question : 

From what payments are withholding agents required by sec- 
tion 366 of the Tax Law to withhold a percentage? 

Section 366 provides for the withholding of a percentage " from 
all salaries, wages, commissions, gratuities, emoluments, perqui- 
sites and other fixed and determinable annual or periodical com- 
pensation of whatever kind and in whatever form paid or received, 
earned for personal services and taxable under this article," etc. 

The descriptive words are largely synonymous and the use of 
all of them indicates to me that the intent of the Legislature 
was to include all forms of payment made (in money or other- 
wise) for personal services if " fixed " or " determinable " and 
" annual " or a periodical." 

This does not include returns from capital invested, such as 
rent, interest, dividends — though it should be noted that, under 
subdivision 2 of section 366, withholding agents must make 
return of information concerning interest, rent, etc 



228 State Department Reports 



[Vol. 20] Attorney-General 



The State law uses the words " commissions," " gratuities," 
and " perquisites " not found in the corresponding section of the 
Federal Law (Revenue Act of 1918, title II, § 221) ; which in 
turn uses the word tl remmerations " not found in the State law. 
But I think the purpose of the two, so far as personal earnings 
is concerned, are the same. 

I think the term "commissions" was inserted in the State 
law to overcome any possibility of argument that otherwise the 
act would not cover payments to persons employed on a percentage 
basis. And I think the word "gratuities" was inserted to cover 
cases of " bonuses " or profit sharing dividends paid to employees 
under such conditions as to be properly regarded as part of the 
compensation for their labor, rather than as gifts based on no 
consideration other than esteem, effection or pity. 

The words " fixed and determinable " and " annual or period- 
ical," found in the section are taken from the similar phraseology 
of the Federal act, and I think they are very succinctly and ade- 
quately defined in the Treasury Department's Regulations No. 
45, article 362. I suggest that in formulating your rules you 
adopt the wording of that article with the changes necessary to 
make it conform to the phraseology of the state law; causing 
it to read somewhat as follows: Only (a) fixed or determinable 
(b) annual or periodical compensation earned for personal serv- 
ices is subject to withholding. Among such compensation, giving 
an idea of the general character of compensation intended, the 
statute specifies salaries, wages, commissions, gratuities, emol- 
uments, and perquisites. But other kinds of compensation are 
included, (a) Compensation is fixed when it is to be paid in 
amounts definitely predetermined. On the other hand it is deter- 
minable whenever there is a basis of calculation by which the 
amount to be paid may be ascertained either before or after 
the rendition of the services, (b) The compensation need 
not be paid annually if it is paid periodically, that is to say, from 
time to time, whether or not at regular intervals. That the length 
of time during which the payments are to be made may be in- 
creased or diminished in accordance with someone's will or the 
happening of an event does not make the payments any the 1 



Construction of Tax Law, Article 16, § 359 229 

Attorney-General [Vol. 20] 

determinable or periodical. A salesman working by the month for 
a commission on sales which is paid or credited monthly receives 
determinable periodical compensation, a physician compen- 
sated IN ONE PAYMENT FOB SERVICES ON A SINGLE CASE, DOES 
HOT RECEIVE PERIODICAL COMPENSATION. 

(For your convenience in comparing the foregoing with the 
Federal rule, I have italicized those words which I have substi- 
tuted for words in the Federal rule, and I have capitalized two 
passages which I suggest as additions in anticipation of inquiries.) 



In the Matter of Construing Section 359, Paragraph 2, Sub- 
division g, of Article 16 of the Tax Law, Added by Chap- 
ter 627 of the Laws of 1919, as to Gross Income 

(Opinion dated June 6, 19 19) 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning gross income, the following reply was 
transmitted : 

Newton, Attorney-General, by James S. Y. Ivins, Deputy. — 
In accordance with your oral request, I have considered the 
question : 

Just what is excluded from gross income under Tax Law, sec- 
tion 359, paragraph 2, subdivision g? 

This subdivision has seemed ambiguous to a number of people 
who have raised the question of whether officers of religious 
denominations were completely exempted by it, whether it applied 
to officers of institutions and trusts, and whether institutions 
must be organized for one or more of the purposes mentioned. 

It seems to me that all ambiguity disappears if we separate 
. the sentence into its proper clauses, thus : 
(i) " Income received 

(ii) by any officer of a religious denomination or by any insti- 
tution or trust ; 



230 State Department Reports 



[Vol. 20] Attorney-General 



(iii) for moral or mental improvement, religious, bible, trust, 
charitable, benevolent, fraternal, missionary, hospital, 
infirmary, educational, scientific, literary, library, patri- 
otic, historical or cemetery purposes, or for the enforce? 
ment of laws relating to children or animals, or for two 
or more of such purposes, 
(iv) if such income be used exclusively for carrying out one or 

more of such purposes ; 
(v) but nothing herein shall be construed to exempt the fees, 
stipends, personal earnings or other private income of 
such officer or trustee." 
This means that to be excluded from gross income under 
this subdivision, the income must (i) have been received (ii) 
by a member of one of three stated classes, (iii) for one or 
more of certain specified purposes, and (iv) must actually be 
used for such purposes. 

To make it perfectly clear that the salary of an officer or 
trustee, given to recompense him for services or to enable him 
to support himself and family, was not excluded under this 
subdivision, the last clause was added, eliminating any possible 
doubt. 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Officials and 
Employees of United States Government 

(Opinion dated June 10, 1919) 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning officials and employees of United States 
government, the following reply was transmitted: 

Newton, Attorney-General, by James S. Y. Ivtns, Deputy. — 
As requested orally, I have examined the question of whether 
persons engaged in the operation of railroads, telegraphs, tele- 



Construction of Tax Law, Aeticxb 16 231 

Attorney-General [Vol. 20] 

phones and cables, under Federal control, are taxable under 
article XVI of the Tax Law. 

Reading the opinion of the Supreme Court of the United 
States in the case of Dakota Central Telephone Co. 
v. State of South Dakota, etc., (Decided June 2, 1919) has 
relieved my mind of any doubt on the subject. It appears from 
that opinion that under power properly vested in him, the Pres- 
ident took over the possession, management, operation and con- 
trol of the telephone lines, of which the United States became the 
temporary proprietor, paying the corporations rentals at a fixed 
rate. In continuing the operation of the lines the officials of 
the companies, under orders of the Postmaster General, were 
merely his subordinates in the employ of the United States. 

The telephone companies did not contract to operate the lines 
for a fixed charge, but increased cost of operation was borne by 
the government. The employees operating the lines became 
employees of the United States. 

They received their compensation from the United States, 
through the agency of the corporations, for convenience — sub- 
ject to increase or decrease by the United States without interfere 
ence by (and without interest to) the corporations. 

I think they became, for the time the lines might remain in 
the control of the United States, employees of the United States, 
just as much as are letter carriers and others in the other branches 
of the Postmaster General's Department. 

The situation is the same with respect to persons employed 
in operating telegraph lines and marine cables under the Federal 
government. In the case of the railroads it is even clearer, 
for I understand the employees are paid directly by the Rail- 
road administration, and not through the instrumentality of the 
corporations. 

Section 359 of the Tax Law, defining gross income, includes 
in paragraph 2, subdivision f : " Salaries, wages and other com- 
pensation received from the United States of officials or employ- 
ees thereof, including persons in the military or naval forces of the 
United States." 



282 State Department Reports 

[Vol. 20] Attorney-General 

It would follow that the earnings during the time of control 
and operation by the United States of employees or telephone and 
telegraph lines, cables, and railroads, are excluded from "gross 
income " as defined in section 3*59. 



In the Matter of Constbtjing Section 359, Paragraph 8 of 
Article 16 op the Tax Law, Added by Chapter 627 of the 
Laws of 1919, as to Wages of Mariners 

(Opinion dated June 12, 1919) 

■ 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning the wages of mariners, the following 
reply was transmitted: 

Newtow, Attorney-General, by James S. Y. Ivinb, Deputy. — 
According to your oral request I have considered the question of to 
what extent wages of mariners should be deemed " income from 
sources within the State " as that phrase is used in section 359, 
subdivision 3 of the Tax Law. 

As I painted out in Income Tax Letter No. 2 (20 State Dept 
Rep. 221), the income from personal service has as its source the 
work done — and the place where the work is done determines 
whether the income is derived from a source within or without 
the State. 

For all purposes with respect to which a State has power to 
legislate, a vessel, owned by a corporation or individual domiciled 
in that State, is regarded as a part of the territory of that State. 
McDonald v. Mallory, 77 K Y. 546 ; Crapo v. Kelly, % 16 Wall 
610. 

And for purposes of taxation a vessel is regarded as having 
a situs at the domicile of its owner unless it is permanently 
located in another jurisdiction. Southern Pacific Co. v. Kentucky, 
222 U. S. 63. 
- I think for the purpose of enforcing the Income Tax Law, 



Construction of Chap. 459, Laws of 1919 233 

Attorney-General [Vol. 20] 

vessels owned by residents of New York or by New York cor- 
porations, should be regarded (unless permanently located in one 
other jurisdiction) as part of the territory of New York It 
would follow that compensation paid to employees for services 
upon such vessels — even if the vessels never touch at a New 
York port — should be regarded as income derived from sources 
within the State. Per contra — earnings on vessels not owned 
by residents or corporations of New York, even while in New 
York waters, should not be regarded as derived from sources 
within the State, unless the vessel has acquired a permanent 
situs in the State (as by plying exclusively between ports in the 
State or remaining in one place — cf. Old Diminion S. S. Co. v. 
Virginia, 198 IT. S. 299). 



In the Matter of Consteuino Chaptbb 459, Laws of 1919 and 
Subdivisions 6 and 9 of Section 130 and Section 132 of 
thb Highway Law, Relative to Highways — Termination of 
Highway Contracts — Change of Type, Requiring New Plans 
and Specifications 

(Opinion dated June 12, 1919) 

If the Commissioner of Highways decides that the original plans and 
specifications of a contract, terminated pursuant to section 2 of chapter 
469 of the Laws of 1919, are inadequate and that it would be a waste 
of the highway funds of the State to complete the construction of the 
highway under such plans and specifications, he may change the type of 
construction and prepare new plans and specifications. The cost of 
construction, however, under the new plans cannot be paid for out of the 
funds appropriated by section 8 of said chapter 459 of the Laws of 1919 
but must be paid for out of the referendum funds available in the 
county wherein the highway is constructed. 

Hon. Frederick S. Greene, State Commissioner of Highways, 
submitted inquiries, together with a request for an opinion 
thereon, as follows: 

" First. If, after termination of a contract in accordance with 
chapter 459 of the Laws of 1919, the Highway Department con- 
siders a change in type necessary for the best interests of the 



234 State Department Reports 



[Vol. 20] Attorney-General 



State, and such a change involves a more expensive type of con- 
struction than that contemplated by the original contract, is the 
excess cost of the completion of such a contract payable from the 
$3,000,000 appropriation under chapter 459 ? 

"Second. In case a change of type is made in any contract 
terminated under chapter 459 of the Laws of 1919 involving 
additional cost on account of such change of type, can the funds 
available in the different counties of the state from the second 
referendum for the payment of the state's share of the cost of 
construction of state or county highways be used to pay the 
state's share of such change of type ? " 

Newton, Attorney-General, by J. L. Cheney, First Deputy. — 
Chapter 459 of the Laws of 1919 became effective on the 5th 
day of May, 1919. This act provides that certain contracts for 
the construction of State and county highways shall be known 
as "war contracts." And by section 2 of said act, such "war 
contracts" may be terminated under an application executed 
by the contractor and the surety on his official bond, and filed 
with the State Commissioner of Highways within thirty days after 
the taking effect of said act; the termination of any such "war 
contracts " being conditioned upon the contractor filing a written 
waiver of any and all claims against the State for damages and 
anticipated profits arising under such contract, and also a waiver 
of the surety on the official bond of the contractor waiving and 
releasing any and all uncollected premiums on the contractor's 
bond. 

The evident intent of section 2 of the act is to terminate all 
contractual relations and liabilities which the State of New 
York might have against the contractor and the surety on his 
official bond, growing out of and under the execution of the 
contract; and further, to terminate all claims, causes of action, 
etc., which the contractor or the surety on his official bond might 
have against the State of New York. 

Section 5 of this act provides that "A contract terminated 
as provided in this act shall be completed under the direction 



Construction of Chap. 459, Laws of 1919 235 



Attorney-General [Vol. 20] 



and supervision of the State Commissioner of Highways by a 
contract awarded after competitive bidding as provided in the 
highway law, and the advertisement for proposals, receipt of bids, 
award and execution of such contract, and the conduct of the 
work thereunder and acceptance thereof by the commission shall 
be in accordance with, and governed by the provisions of, the 
highway law which may be applicable thereto." 

This section makes it mandatory upon the Commissioner of 
Highways to complete all the highways wherein the contracts 
for the construction thereof come within the meaning of the 
term " war contracts ; " and they shall be completed by contracts 
awarded after competitive bidding, etc., governed by and follow- 
ing the provisions of the Highway Law. Therefore, the question 
arises as to whether or not the Commissioner of Highways is 
limited or restricted in the method or manner of the completion 
work of these highways known as " war contracts " thereby termi- 
nated under the provisions of section 2 of this act. In other 
words, can the Commissioner of Highways view the construction 
of these uncompleted highways as original constructions and, 
if in his judgment it is deemed for the best interests of the State, 
prepare new plans and specifications changing the type of con* 
struction and making the same, if necessary, a more expensive 
piece of construction, and still preserve to such highways the 
benefits inuring thereto under the $3,000,000 appropriation made 
available under section 8 of this act ? 

This leads to a construction of section 8 of the act which is 
as follows: "The sum of three million ($3,000,000) dollars 
or so much thereof as may be necessary is hereby appropriated 
out of any money in the treasury not otherwise appropriated 
and shall be expended in payment of the state's share of the 
excess cost of the completion of work embraced in any contract 
dated not later than December 31, 1918, for highway improve- 
ment which has been or may hereafter be abrogated for non- 
performance under the provisions of section 132 of the highway 
law, or terminated under the provisions of this act." 

It appears from the reading of this section that the moneys 



236 State Department Reports 

[Vol. 20] Attorney-General 

from the $3,000,000 appropriation can only be applied to the 
payment of the excess cost of completing any highway or high- 
ways, terminated under this act, which the Commissioner awards 
for completion under the original plans and specifications and the 
terms of the original contract. This section specifically directs 
that the moneys appropriated thereunder shall only be expended 
for the State's share of the excess cost of the completion of the 
work embraced in the original " war contracts." It is therefore 
evident that if the Commissioner of Highways should desire to 
make any radical change in the manner of construction of any 
highway terminated under section 2 of this act, which changes 
necessitate the preparation of new plans and specifications, the 
moneys appropriated under section 8 would not be available for 
the payment of the excess cost occasioned by such construction. 
The extent of the modification of any such contract is limited by 
the provision of subdivision 9 of section 130 of the Highway 
Law which permits the Commissioner of Highways to make 
certain changes in the original contract as may seem necessary 
from time to time as the work progresses by entering into a sup- 
plemental contract with the contractor. The provisions of sub- 
division 9 of section 130 are not broad enough, however, to 
permit the Commissioner to change the type of construction. 

In determining the second question asked by the Commissioner 
of Highways, there seem to be two points which must be taken 
into consideration: 

First. Can the commissioner change the type of a highway? 

Second. If a change of type can be made, from what source 
is the fund available for the payment of the cost of construction 
of such highway? 

We look in vain for any provision in the Highway Law grant- 
ing specific authority to the Commissioner of Highways to change 
the type of construction after a contract has been awarded. The 
only authority of the Commissioner bearing upon this proposi- 
tion is found in section 132 of the Highway Law, which pro- 
vides in substance that the Commissioner shall have the super- 
vision and control of the construction, and that it is his duty to 



Construction of Chap. 4-59, Laws of 1919 287 



Attorney-General [Vol. 20] 



see that every such contract is performed in accordance with the 
plans and specifications and that, if he shall determine that the 
work is not being performed according to such plans and speci- 
fications and for the best interests of the State, he may stop the 
contractor from proceeding and complete the work with State 
forces in such manner as will accord with such plans and specifi- 
cations or he may cancel the contract and relet the same and, if 
the cost exceeds the original contract price, the contractor fail- 
ing to perform the work shall be liable for such excess cost 
By either method of completion as set forth in said section 132 
it must, in all respects, conform to the original contract plans 
and specifications. 

In Matter of Standard Bitulithic Co. v. Carlisle, 161 App. 
Div. 191, the Commissioner of Highways cancelled the contract 
upon the grounds that " the performance of such contract would 
be against public policy and would be of irreparable damage to 
the State for the reason that if the highway is improved accord- 
ing to specifications it will not provide a proper highway to con- 
struct in said locality, * * *." 

Presiding Justice Smith, construing the provisions of section 
132, says: "It is by forced construction only that section 132 
of the Highway Law * * * can be held applicable to this 
case. The plain intent of that section is to authorize an annul- 
ment of the contract through the fault of the contractor, in which 
case the contractor is made liable for any excess paid upon a relet- 
ting of the contract." 

Justice Kellogg, in the same case, states : " In my judgment 
section 132 of the Highway Law has no application to the ques- 
tion under consideration. That section contemplates a suspen- 
sion of the contract, or a stopping of the work, growing out of 
the fact that the work is not being performed according to the 
contract or for the best interests of the State. It contemplates 
a default or a failure to properly perform by the contractor. " 

Notwithstanding the fact that no authority is found in the 
Highway Law enabling the Commissioner to cancel a contract 
and prepare new plans and specifications for the completion 



238 State Department Reports 

[Vol. 20] Attorney-General 

thereof, it appears that the Commissioner is the sole repre- 
sentative of the State and the responsibility as to the State high- 
ways rests upon him; that it was the evident intention of the 
Legislature to charge the State Commissioner of Highways with 
the duty and responsibility of constructing proper and durable 
highways, and to safeguard the highway moneys of the State 
to the end that there should be no waste of the highway funds. 

Subdivision 1 of section 15 of the Highway Law provides that 
the Commissioner shall " have general supervision of all high- 
ways and bridges which are constructed, improved or main- 
tained in whole or in part by the aid of state moneys." And 
further, by subdivision 6 of section 15, that it shall be the duty 
of the Commissioner to " investigate and determine upon the 
various methods of road construction adapted to different sections 
of the state, and as to the best methods of construction and main- 
tenance of highways and bridges." 

In Matter of Standard Bitulithic Co. v. Carlisle, supra, the 
court said : " The Highway Commissioner is given authority to 
determine the method of construction of the highways. It would 
seem as a necessary incident to that power, in case is should be 
found that a method determined upon proved inadequate, that the 
Highway Commissioner should have authority to change the 
method of construction if necessary, * * *." 

It therefore appears that the Commissioner may at any time 
exercise his judgment in determining whether the public good 
requires that a highway under contract shall not be built under 
existing plans and specifications. It appears that, as a matter 
of public policy and for the general welfare and best interests of 
the State the Commissioner may, notwithstanding an omission of 
such authority in the Highway Law, at any time he deems it 
expedient, cancel any highway contract found to be inadequate and 
prepare new plans and specifications for the completion thereof. 

It was held in People ex rel. Ryan v. Aldridge, 83 Hun, 279, 
that " No person can be compelled, by any process of law, to 
prosecute any enterprise undertaken for purposes of his own 
beyond the point at which he sees fit to discontinue the under- 



Constbtjction of Tax Law, Abticle 16 233j 

Attorney-General [Vol. 20] 

taking; * * *. The rule applies as well to bodies corporate and 
politic as to individuals, and even to the State, * * *." 

I therefore reach the conclusion that for the best interests of the 
State, and to preserve the funds and property of the State, that 
where the Commissioner ascertains that the original plans and 
specifications of any contract terminated under section 2 of chap- 
ter 459 of the Laws of 1919 are inadequate, and that it would be 
a waste of the highway funds of the State to complete such con- 
struction thereunder, that the Commissioner may change type of 
such construction and for that purpose prepare new plans and 
specifications therefor. 

The conclusion having been reached that the Commissioner is 
vested with the power and authority to change the type of a 
highway, the question now arises from what source is the fund 
available for the payment of such construction? No moneys 
from the $3,000,000 appropriation, under section 8 of chapter 
459 can be applied to the payment of the excess cost of construc- 
tion of a highway wherein the type has been changed and new 
plans and specifications prepared. 

The expenditure of the moneys from the referendum funds 
available in each county is not restricted to any type of construc- 
tion. And the extent of such construction is only limited by the 
amount available therefor. I therefore conclude that the pay- 
ment of the cost of construction for all those highways wherein 
the Commissioner may deem it necessary to change the type may 
be made from the referendum funds available in the county 
wherein such highways are to be constructed. 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Its Effect 
on the Tax on Mortgages, Article XI of the Tax Law, and 
upon Secured Debts upon Which the Taxes are Paid under 
Former Article XV of the Tax Law 

(Opinion dated June 19, 1919) 

The income from mortgages and "secured debts" is subject to the 
income tax and will not be excluded in the computation of gross income. 



240 State Dbpabtmekt Reports 

[Vol. 20] Attorney-General 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning gross income, investments, secured debts, 
mortgages, the following reply was transmitted : 

Newton, Attorney-General, by James S. T. Ivins, Deputy. — 
In accordance with your oral request I have considered the 
question : 

Is any income tax payable upon the income derived from mort- 
gages on which the mortgage tax has been paid under article XI 
of the Tax Law, or secured debts upon which the tax was paid 
under former article XV of the Tax Law ? 

Under section 251 of the Tax Law, mortgages on real prop- 
erty taxed by article XI "shall be exempt from other taxation 
by the state * * * except — " specified parts of the Tax 
Law. Under former section 331 of the Tax Law secured debts 
(as defined in former section 330), upon which the tax was 
paid, became exempt " from all taxation in the state except " 
specified sections. Under the present section 331, investments 
(as defined in section 330) upon which the investment tax is 
paid, became similarly exempted. These exemptions were pro- 
vided for in the statutes at different times to encourage the 
voluntary payment of taxes upon personal property on which it 
was always very easy to avoid local taxation. The consideration 
for the exemption varied in the three statutes. Under the 
Mortgage Tax Law (Art. XI) by payment of fifty cents upon 
$100 of principal debt, a perpetual exemption for that debt was 
secured. Under the Secured Debt Tax Law (Tax Law, art. XV) 
as originally enacted (Laws of 1911, chap. 802), on payment 
of fifty cents on each $100, a perpetual exemption was secured. 
This article was amended (Laws of 1915, chap. 465) raising 
the price of exemption to seventy-five cents on the $100 and 
cutting down the exemption to five years. A new article under 
the same title was substituted (Laws of 1916, chap. 261), but 
the tax remained at the rate of seventy-five cents on each $100, 
and the exemption remained fixed at five years. The present Invest- 
ment Tax Law took the place of the Secured Debt Tax Law as 



CoarsTBtronoN of Tax Law, Abtiolb 16 841 



Attorney-General [Vol. 20] 



article XV of the Tax Law (Laws of 1917, chap. 700) and 
investments as defined pay a voluntary tax of twenty cents on 
the $100 for each year (not exceeding five) and exemption is 
secured for the number of years the tax is paid. 

I think the fact that persons paying under the Mortgage Tax 
Law and the former Secured Debt Law got much more for their 
money than those who paid after June 1, 1917, under the 
Investment Tax Law, must have been in the minds of the 
framers of the Income Tax Law when section 359, subdivision 
2-d, was made to exempt from the income tax, by excluding 
from the definition of gross income, the income from investments 
upon which the tax has been paid since June 1, 1917, under the 
Investment Tax Law, while at the same time the income from 
mortgages and the income from secured debts were left unmen- 
tioned in the category of exempt property. 

The fact that the Legislature specifically mentioned as exempt 
the income from one class of exempt property and omitted to 
exempt the income from two other classes, indicates that it 
was not the legislative intention that the two latter should have 
the benefit of the exemption. The rule of statutory construction 
inclusio unius est exclusio alterius controls, and I must construe 
the statute just as if the Legislature had expressly stated that 
it did not intend to exempt from the income tax income from 
mortgages or secured debts. 

The exemption granted by the mortgage tax was an exemption 
from other taxation of the mortgage and the debts and obligations 
secured thereby and the paper writings evidencing the same 
(Tax Law, § 251) and the exemption granted by the secured 
debt tax was an exemption of the secured debts upon which the 
tax was paid (Tax Law, former § 331). The exemption of a 
mortgage and the exemption of a secured debt are not necessarily 
the exemption of income derived therefrom any more than the 
exemption of a farm implies the exemption of the income derived 
therefrom. The fact that income taxes have been rather rare in 
this country results in a dearth of authorities on this special 
subject, but I have no doubt that the courts will hold that in tax- 
Statb Dipt. Kept.— Vol. 20 16 



242 State Department Reports 



[VoL 20] Attorney-General 



ing income from secured debts or from mortgages, the State has 
not violated its contract not to tax those debts or those mort- 
gages. The Supreme Court of North Carolina many years ago 
held that the exemption of bank stock from other than a fixed 
tax did not prevent the levying of an income tax upon the divi- 
dends which might be paid to shareholders. State v. Fetway, 8 
Jones Eq. 396. When a dividend is paid on stock or interest is 
paid on a mortgage, it ceases to be a part of the obligation and 
becomes cash in the hands of the recipient and as such is taxable 
as income at the will of the Legislature. Under the Federal 
Income Tax Law a firm of exporters relied on the provision of 
the United States Constitution that "no tax or duty shall be laid 
on articles exported from any state." as the basis of their claim 
that their income from exports was immune. The United States 
Supreme Court pointed out that an income tax laid generally on 
net income did not violate the constitutional provisions because 
it affected a net income derived .from the business of exporting. 
The court said: "It is not laid on income from exportation 
because of its source, or in a discriminative way, but just as 
it is laid on other income. The words of the act are i net income 
arising or accruing from all sources.' There is no discrimina- 
tion. At most, exportation is affected only indirectly and 
remotely. The tax is levied after exportation is completed, after 
all expenses are paid and losses adjusted, and after the recipient 
of the income is free to use it as he chooses." Peck & Company 
v. Lowe, 247 U. S. 165-174. 

It seems to me that the logic in the question before me is 
similar. The individual is taxed on his income from all sources 
and an exemption granted to a mortgage or a secured debt dofes 
not cover the same property. 

I am strengthened in this construction of the statute by the 
well-settled rule that exemption statutes will be construed most 
strictly against persons claiming their benefit and that neither 
the right of taxation nor any other power of sovereignty which 
the community have an interest in preserving undiminished, 
will be held to be surrendered, unless the intention to surrender 
is manifested in words too plain to be mistaken. 



Construction of Banking Law 243 



Attorney-General [Vol. 20] 



In sum, it is my opinion that the income from mortgages and 
" secured debts," not being specifically exempted as is the income 
from "investments/' remains subject to the income tax and 
may not be excluded in the computation of gross income. 



In the Matter of Construing the Banking Law, as to the 
Power of Savings Banks to Declare Dividends upon Accounts 
of Three Thousand Dollars and upon the Interest Credited 
on the Account 

(Opinion dated June 21, 1919) 

A sayings bank may declare dividends on accounts of $3,000 plus the 
dividends thereafter credited on such accounts. 

In response to an inquiry concerning the Banking Law, the 
following reply was transmitted : 

Newton, Attorney-General. — Your letter of June twelfth 
inquires whether a dividend may be declared by a savings bank 
upon $3,000 only or upon the $3,000 plus all dividends there- 
after credited on the account. 

In an opinion rendered on January 22, 1019, we expressed 
the view that dividends credited on an account could be excluded 
in ascertaining whether the account had reached $3,000, on the 
theory that while the dividends are credited to the account and 
in reality become part of the deposit, the prohibition of the 
Banking Law in section 247 limiting deposits to $3,000 is 
directed against the action of depositors in placing money in the 
bank or the bank's action in attempting to receive more than 
$3,000 from any one depositor, rather than against the bank's 
action in crediting to an account that which the account along 
with all others is equitably entitled to as a distributive share of 
the bank's earnings. 

The same reasoning would seem to apply to the inquiry you 
present. Section 247 of the Banking Law, as you are aware, 



244 State Depabtmbnt Reports 

[Vol. 201 Attorney-General 

reads : " The aggregate amount of deposits to the credit of any 
individual at any time, including in such aggregate all deposits 
credited to him as trustee or beneficiary of a voluntary and 
revocable trust and all deposits credited to him and another or 
others in either joint or several form, shall not exceed three 
thousand dollars, exclusive of dividends, and exclusive also of 
deposits arising from judicial sales or trust funds standing in 
his name as executor, administrator or trustee named in a will 
or appointed by a court of competent jurisdiction, * * *." 

This provision concerns the amount of the deposit and excludes 
dividends entirely from the reckoning when computing the 
amount of a deposit; but it does not fix any sum upon which 
dividends may or may not be paid. That matter I conclude is 
a matter for the by-laws under the powers conferred upon the 
bank to classify deposits and credit dividends found in section* 
256 of the statute. 

The Banking Law by an amendment contained in chapter 477 
of the Laws of 1885 formerly prohibited the practice of pay- 
ing dividends upon any excess over $3,000 : 

" § 290. It shall be unlawful for any savings bank, directly 
or indirectly, to receive from any individual a deposit or deposits 
in excess of three thousand dollars ; but this limitation shall not 
apply to deposits arising from judicial sales or trust funds; nor 
shall it be construed as prohibiting the crediting of interest on 
individual accounts which may have reached the maximum limit, 
provided that thereafter no interest shall be allowed on such 
increase" 

The above provision was repealed by the Banking Law of 
1892 (Chap. 689) and the Banking Law has not since contained 
any similar provision. 

As section 247 of the present Banking Law hereinbefore referred 
to openly sanctions the adding of dividends to a full account of 
$3,000, and $3,000 plus all dividends added becomes the deposit 
of the customer and the amount to which he is entitled, I cannot 
see why on principle the customer ought not to be paid dividends 
upon the total amount which is due him and which the bank has 
made use of in producing its earnings. 



Construction of Tax Law, Article 16 245 



Attorney-General [Vol. 20] 



In the Matter of Construing Article 16 of the Tax Law, 
Added by Chapter 627 of the Laws of 1919, as to Its Effect 
upon the Investment Tax Law, Article 15 of the Tax Law 

(Opinion dated June 25, 1919) 

Payment of the investment tax will not procure exemption from the 
income tax. The only advantage gained in paying the investment tax is 
exemption from the extra 5 per cent transfer tax imposed by section 221 -b 
of the Tax Law. 

In response to an inquiry from Hon. Eugene M. Travis, State 
Comptroller, concerning exemptions — Investment Tax — the 
following reply was transmitted: 

Newton, Attorney-General, by James S. Y. Ivins, Deputy. — 
As requested orally I have considered the question: what is to 
be gained by paying the investment tax (under Tax Law, article 
XV) since the enactment of the Income Tax Law ? 

Payment of the investment tax certainly will not procure 
exemption from the income tax any longer. Section 359 pro- 
vides that the term "gross income" does not include certain 
items, which shall be exempt from taxation under this article. 
Among those items is : " investments upon which the tax pro- 
vided for in section three hundred and thirty-one of this chapter 
has heretofore been paid since June first, nineteen hundred and 
seventeen, during the period of years for which such tax shall have 
been paid." The interjection of the word "heretofore" very 
clearly expresses the intent of the Legislature to exempt only 
those investments which had already paid the tax — not those 
which might pay it after the enactment of the new law (May 
14, 1919). 

Most " investments " are exempted from local taxation after 
July 31, 1919, by section 352, which exempts all from which any 
income is derived. 

The only advantage left to be gained by paying the investment 
tax is exemption from extra 5 per cent transfer tax imposed 
by section 221-b. The Court of Appeals has recently held the 



246 State Department Reports 

[Vol. 20] Attorney-General 

last mentioned section constitutional (Matter of Watson, 22 G 
N. Y. 384), ruling that it is not a penalty but a valid extra tax, 
imposed upon the right to inherit from all (except dealers) who 
die possessed of "investments" upon which local taxes, the 
" secured deht tax," or the investment tax, has not been paid 
as specified. Liability to local taxes is removed, in most cases, 
by section 352, and with that liability is removed most of the 
incentive for paying the investment tax. But section 221-b has 
not been repealed, directly or by implication; nor has article XV; 
and the former can only, be avoided by paying the latter. 
Whether the bargain, in any specific case, is a good one is a 
qiiestion now, as heretofore, for each taxpayer to consider and to 
decide for himself. 



In the Matter of Construing Section 223 of the Banking Law 
as to Trust Companies Organized under the Laws of a Sister 

State 

(Opinion dated June 25, 1919) 

A foreign trust company cannot act as trustee for the bondholders of 
a domestic corporation under a trust mortgage covering property in this 

State. 

In response to an inquiry the following reply was transmitted: 

Xewton, Attorney-General, by C. T. Dawes, Deputy. — In 
your letter of June nineteenth you ask whether or not a trust com- 
pany organized under the laws of the State of Pennsylvania and 
doing business in that State, can legally act as trustee for the 
bondholders under a mortgage, about to be executed by a corpora- 
tion organized under the laws of the State of New York and 
located in this State, upon property which is entirely situate in 
this State. 

My brief answer is a reference to section 223 of the Banking 
Law which specifically forbids any foreign trust company from 
exercising such a power within this State. In the opening sen- 
tence of section 223 (which is entitled "Prohibition against 
encroachments upon powers of trust companies ") occurs the fol- 



CoisrsTRuoTioar of Banking Law, Section 223 247 

I 

Attorney-General [Vol. 20] 

lowing language: " No corporation other than a trust company 
organized under the laws of this state shall have or exercise in 
this state the power to receive deposits of money, securities or 
other personal property from any person or corporation in trust, 
or have or exercise in this state any of the power specified in sub- 
divisions one, four, five, six, seven and eight of section one hun- 
dred eighty-five of this article, nor have or maintain an office 
in this state for the transaction of, or transact, directly or 
indirectly, any such or similar business." 

Subdivision 4 of section 185, defining the powers of domestic 
trust companies, to which reference is above made by section 223 
provides that every domestic trust company shall have, in addition 
to the .powers conferred upon it by the general and stock corpora- 
tion laws, the power " To act as trustee under any mortgage or 
bonds issued by any municipality, body politic or corporation, 
foreign or domestic, and accept and execute any other municipal 
or corporate trust not prohibited by the laws of this state." 

The prohibition contained in section 223 first appeared in an 
amendment (Laws of 1906, chapter 601) to section 156 of the 
Banking Law of 1892. The statute of 1906 was aimed directly 
at the business of foreign trust companies in this State, for it is 
entitled "An act to amend the banking law in relation to the 
powers of a foreign corporation to transact the business of a trust 
company in this state." And the amendment inserted in the 
section reads: "No foreign corporation shall have or exercise 
in this state the power to receive deposits of trust moneys, securi- 
ties and other personal property from any person of corporation 
or any of the powers specified in subdivisions one, four, five, six, 
seven, eight, ten and eleven, nor have or maintain an office in this 
state for the transaction of, or transact directly or indirectly, any 
such or similar business." 

From a reading of the provisions cited, I find no difficulty in 
advising you that a foreign trust company cannot act as trustee 
for the bondholders of a domestic corporation under a trust 
mortgage covering property in this State. Indeed, I do not see 
how any other interpretation can possibly be placed upon the 
statutes. 



248 State Department Reports 
i 

[Vol. 20] Attorney-General 

f 

In the Matter of Construing the Highway Law and General 
City Law as to the Power of a City to Exact a License Fee 

(Opinion dated July 16, 1919) 

Lieenae fees are not taxes, and a city ordinance requiring a license 
fee, from cartmen applies to motor vehicles and is not in conflict with 
section 282, subdivision 7 of the Highway Law. 

Hon. Stewart F. Hancock, corporation counsel, Syracuse, N. 
Y., submitted an inquiry, together with a request for an opinion 
thereon, as follows : 

" The city of Syracuse has enacted an ordinance which pro- 
hibits any person from pursuing ' within the city the business 
of cartman, drayman or expressman without a license therefor/ 
Each cart, dray or wagon is required to be numbered. A fee of 
five dollars for each vehicle so used in generally charged, and a 
fee of fifteen dollars is charged for each furniture van and piano 
moving wagon. Does this apply to motor vehicles ? " 

Newtotn, Attorney-General, by J. L. Cheney, First Deputy. — 
The city has attempted to exercise this power under section 20, 
subdivision 13, of the General City Law which provides as fol- 
lows: "To maintain order, enforce the laws, protect property 
and preserve and care for the safety, health, comfort and general 
welfare of the inhabitants of the city and visitors thereto; and 
for any of said purposes to regulate and license occupations and 
businesses." 

Section 282, subdivision 7, of the Highway Law, which is 
part of what is commonly known as the Motor Vehicle Law, pro- 
vides : " Fees in lieu of taxes. The registration fees imposed 
by this article upon motor vehicles, other than those of manu- 
facturers and dealers * * * , shall be in lieu of all taxes, 
general or local, to which motor vehicles may be subject " 

I assume at the outset that the fees respectively of five dollars 
and fifteen dollars charged by the city of Syracuse are not taxes 
bat are license fees. I put this assumption upon two grounds: 



COCTSTBUCTION OF HIGHWAY LAW 249 



Attorney-General [Vol. 20] 



• 



r 



First, the ordinance bo states, the amount of the fee only being 
regulated by the number of vehicles used, and, second, the fee of 
five dollars probably covers the expenses of administration for 
vehicles of the general class and the fee of fifteen dollars covers 
the inconvenience in administering the traffic laws where furni- 
ture vans and piano moving wagons are used. It is clear, of 
course, that so far as taxation is concerned, these commercial 
vehicles may be taxed by a municipality where a special grant 
of power exists. 

The question really to be determined is whether or not the regis- 
tration features of the Motor Vehicle Law are so exclusive as to 
deprive all municipalities of authority to license any business in 
which motor vehicles may be used. I am of the opinion that 
they are not, for two reasons: First, article Il-a of the General 
City Law, in which section 20, subdivision 13 appears, was 
added by the Laws of 1913, chapter 247, three years after the 
Motor Vehicle Law with its general licensing features was first 
passed. Second, this is a license upon a business which cities 
under the General City Law are expressly given power to control. 
The control and supervision of the streets of municipalities has 
long been recognized as inherent in the municipality except where 
the State may expressly take over such control and supervision 
itself. See People ex rel. Morrill v. Supervisors, 112 N. Y. 585, 
588, applying People ex rel. etc. v. Flagg, 46 id. 401. 

Further it must be recognized that the Motor Vehicle statute 
is in the main a taxing statute, for so far as the sum collected is 
concerned this greatly exceeds the cost of administration and is 
a real source of revenue to the State and to the municipalities with 
which the amount collected is shared. For that reason I believe 
the special provision as to taxation was placed in the statute in 
order that motor vehicles belonging to dealers or used for com- 
mercial purposes might continue to be taxed as personal property. 
See Attorney General's Opinions for 1911, p. 362. 

It is therefore my opinion that the ordinance is valid. 



250 State Department Reports 

i 

[Vol. 20] Attorney-General 

| 



In the Matter of Construing Section 153, Subdivision 1 of 
the General Municipal Law Relative to Child Welfare 

(Opinion dated July 10, 1919) 

The following inquiries have been received from the State 
Board of Charities relative to the law applicable to Boards of 
Chad Welfare: 

" On December 28, 1916, the Albany County Board of Child 
Welfare granted to a widow, for her four children under sixteen, 
an allowance which was continued until April 26, 1917, when 
she moved to New Jersey. In April, 1919, the widow returned 
to Albany, moving her family and household effects hither, where- 
upon she requested the granting of her former allowance. 

" There has arisen in a certain county the case of a widow 
whose husband recently died. Previous to his death he adopted 
four of his brother's motherless children and took care of them. 
The widow is now left with these four children with no means of 
support, and the question is asked whether or not the widow and 
children are eligible for relief under the statute. 

"A woman married a widower ; he had one child, who was three 
years old at the time of the second marriage. The man died on 
January 16, 1919, and the widow has applied for an allowance. 
There has been no adoption, but a will was made under which the 
father gave to his widow the guardianship of the child." 

Newton, Attorney-General, by J. L. Cheney, First Deputy. — 
I shall consider the questions in the order presented. 

It appears from the limited statement of facts that in the first 
case the widow after receiving an allowance here abandoned her 
residence in Albany county and took up another residence in New 
Jersey ; at least her allowance was discontinued and she did not, 
during the two years of her absence, claim the benefits of the act 

In my opinion her status becomes that of an original applicant 
Section 153, subdivision 1 of article 7-a of the General Municipal 



CONSTBUCTION OP GENERAL MUNICIPAL LAW, § 153, SUBD. 1 251 

t - 

Attorney-General [Vol. 20] 

I 

Law relative to child welfare provides: "A board of child wel- 
fare may, in its discretion, when funds have been appropriated 
therefor, grant an allowance to any dependent widow residing in 
the county or city wherein she applies for an allowance, and who 
is deemed by the local board of child welfare to be a proper person 
mentally, morally and physically to care for and bring up such 
child or children, provided such widow has been a resident of the 
county or of the city wherein the application for an allowance is 
made for a period of two years immediately preceding the applica- 
tion, and whose deceased husband was a citizen of the United 
States and a resident of the state at the time of his death." 

It is further provided under subdivision 8: "An allowance 
made by the board shall not be for a longer continuous period than 
six months without renewal, which allowance may be continued 
from time to time at same or different amounts, for similar periods 
or less, either successively or intermittently or may be revoked at 
the pleasure of the local board of child welfare." 

It, therefore, appears that this relief is granted under a system 
of renewals and this implies an application for renewal either 
formally or informally as the condition of the family may be, or, 
by acquiescence, as the board may require under its administrative 
functions. The widow in this case, therefore, is in the same 
position as one originally applying for an allowance. It is clear 
she has not been for two years previous to this application a resi- 
dent of a county or city wherein the application for an allowance 
is made. 

It is, therefore, my opinion that she must look elsewhere for 
relief. This can be afforded here under other statutes. 

The second and third questions may be considered together. 
This department had occasion to consider them in an unpublished 
opinion, dated January 2, 1917, and addressed to the State Board 
of Charities. There a woman married a widower who had by 
his first marriage three children. She later had a child of her 
own. Her husband died and she requested an allowance for all 
the children. At that time it was held that such allowance could 
be made. It was suggested, as a matter of precaution, that the 



252 State Department Bepobts 



[Vol. 20] Attorney-General 



woman be required to adopt the children according to the provi- 
sions of the Domestic Relations Law, in order that fraud might 
not be foisted upon the Welfare Board and the widow accept the 
bounty of the municipality, without corresponding responsibility 
for the children, of which she was not in a legal sense the mother. 
In cases two and three, here submitted, it appears that the two 
women have not assumed any legal status towards the children 
unless in case two the widow joined the father in the adoption of 
his brother's orphans. Strictly, therefore, I believe that the 
Board could require and, perhaps, procure for the widows the 
adoption of the children in order that after they had obtained this 
relief for a time they would not be in a position to abandon the 
children, requiring their commitment to an institution, which it is 
the main purpose of the statute to avoid. Nevertheless, I am of 
the opinion that this requirement of adoption rests in the sound 
discretion of the Board. The relief must be renewed at periods 
of six months and may be revoked at any time within the discre- 
tion of the Board. It seems to me, therefore, that the public 
interest may be guarded even though adoption is not actually 
required. This is not a statute in derogation of the common right 
but one which should be most liberally construed to effect the 
purpose sought by the Legislature, namely, to offer children home 
training and conditions and to prevent commitments to public 
institutions where the care necessarily is not as desirable and 
where the public expense will at least be as great, section 148. 
It is not always desirable that a stepmother shall adopt her step- 
children, yet the intimate relation into which her marriage with 
their father has brought her is one which should be continued 
when necessary, where the stepmother is a person, in the words of 
the statute, " mentally, morally and physically competent to care 
for and bring up " such dependent children. Exercise of discre- 
tionary power granted should safeguard the local Board of Child 
Welfare from an improper application or abuse of the statute, 
for it must be remembered that all persons who have young 
children in their care, whether such persons are parents or 
guardians or sustain only a temporary relation, are required to 
exercise due diligence in their care of the children and neglect or 



CONBTBUOTIOW OF SEC. 94-A OF EDUCATION LAW 253 

Attorney-General [Vol. 20] 

failure to do so is punishable as a crime. In addition, the Boards 
of Child Welfare are always subject to the supervision of the 
State Board of Charities which prevents the granting of any 
special privilege or the abuse of any power. 



In the Matter of Construing Section 94-a of the Education 
Law, Added by Chapter 136 of the Laws of 1919 

(Opinion dated July 21, 1919) 

Section 94-a of the Education Law, added by chapter 136 of the Laws 
of 1919, does not affect the power of visitation of the State Board of 
Charities over the New York State School for the Blind, nor does it 
take the teachers in that school out of the classified civil service. 

Hon. C. A. Hamilton, Superintendent, New York State School 
for the Blind, submitted an inquiry, together with a request for 
an opinion thereon, as follows: 

" What is the effect of chapter 136 of the Laws of 1919 upon 
the management of the State School for the Blind at Batavia 
and upon the classification in the civil service of the teachers of 
that institution?" 

Newton, Attorney-General. — Section 11 of article VIII of 
the Constitution provides that the Legislature shall provide for 
a State Board of Charities which shall visit and inspect all in- 
stitutions which are of a charitable character, except those made 
subject to visitation by the other commissions named in the 
same section. If the State School for the Blind is a charitable 
institution, the power of visitation and inspection is vested in the 
State Board of Charities by the Constitution and cannot be taken 
away from the State Board of Charities by the Legislature. That 
the School for the Blind is a charitable institution, in so far as 
it clothes, educates and maintains indigent pupils at public ex- 
pense, may be considered definitely settled by the case of People ex 
rel. New York Institution for the Blind v. Fitch, 154 K Y. 14. 
In every thing else the school is an educational institution. This 
was undoubtedly in the minds of the Board of Statutory Consoli- 



254 State Depabtment Reports 

[Vol. 20] Attorney-General 

dation and the Legislature when the statutory provisions relating 
to the education of the blind, and particularly to the New York 
State School for the Blind, were put into articles 38 and 39 of 
the Education Law. Article 39 of the Education Law provides 
for the continued existence of the school and puts the manage- 
ment of it in the board of trustees. Control of such matters as 
regulations for admission and so on is given to the Commissioner 
of Education by article 38 of the Education Law. I know of 
no powers of regulation, supervision or control over the school 
vested in the State Board of Charities, except the powers of 
visitation and inspection which are constitutional. 

The Legislature of 1919 added section 94-a to the Education 
Law which purports to transfer all the powers of regulation, 
supervision and control heretofore exercised by the State Board 
of Charities over the school to the Commissioner of Education, 
but the section carries a proviso that nothing therein contained 
shall in any way deprive the State Board of Charities of its 
powers of visitation and inspection, nor in any way affect the 
fiscal control of said school now exercised under the State Charities 
Law by the Fiscal Supervisor of State Charities. Of course the 
Legislature could not have transferred the powers of visitation 
and inspection from the State Board of Charities. Apparently 
it did not wish to transfer the fiscal control from the Fiscal Super- 
visor. I am unaware of any other control or management of the 
school except those provided for by the Education Law and vested 
in the trustees of the school and the Commissioner of Education. 
It would seem to me that the section is as nearly nugatory as a 
statute could be. 

Section 9 of the Civil Service Law divides the civil service into 
the classified and unclassified service. The unclassified service 
includes elective offices, offices filled by the Legislature, certain 
offices in the appointment of the Governor, election officers, heads 
of departments " and persons employed in or who seek to enter 
the public service as superintendents, principals or teachers in 
a public school or academy or in a state normal school or college." 
It is generally understood that the term " public school " refers 



RlOHT OF A CONTRACTOB TO WITHDRAW HlS BlD 255 



Attorney-General [Vol. 20] 



to one of the common schools maintained under the Education 
Law by a political subdivision of the State, and does not refer 
to the State schools receiving pupils from all parts. The phrase 
" normal school or college " in this State has been applied only 
to schools and colleges for the training of teachers and not gen- 
erally to occupational schools. Teachers in schools not " public " 
and not " normal " would not fall within the definition of the 
unclassified service, and section 9 of the Civil Service Law goes 
on to provide that the classified service shall comprise all positions 
not included in the unclassified service. For many years the 
teachers in the School for the Blind have been considered by the 
Civil Service Commission, and everybody else concerned, to be in 
the classified service. Chapter 136 of the Lawe of 1919 has not 
changed the character of the school nor made it any more of a 
public school or a normal school than it was before. I see no 
reason why the teachers should not continue to be regarded as in 
the classified civil service. 



In the Matter of the Right of a Contractob to Withdraw 
His Bid Deposited with the State Commission of Highways 

(Opinion dated August 8, 1919) 

After a bid or proposal for a highway contract has been deposited with 
the State Commission of Highways it cannot be withdrawn, even with 
the consent of the Commission, unless an unintentional mistake has been 
made for which a court of equity would grant relief. The rules of the 
Commission are as binding upon it as upon the contractor. 

Hon- Frederick Stuart Greene, State Commissioner of High- 
ways, submitted inquiries, based upon the following statement of 
facts, together with a request for an opinion thereon : 

" Some time during the morning of July 22, 1919, the E. W. 
Foley Contracting Corporation deposited in a box provided for 
that purpose by the State Commission of Highways a proposal 
for the construction of county highway No. 1400, in the county 
of Seneca, for the sum of $118,205.50. The bids for the award- 
ing of contracts for the construction of such highway were opened 



256 Stats Department Repobts 



[Vol. 20] Attorney-General 



at one o'clock p. m. on said date. Subsequent to ten o'clock a. m. 
and prior to one o'clock p. m. a second bid was deposited by Mr. 
Foley, containing the following lead pencil notation: 

" ' This bid supersedes one formerly deposited for $118,000 and 
CK deposited for that bid applies to this one. 

"<E. W. Foley.' 

" Is there any legal reason why a proposal for the construction 
of a highway cannot be withdrawn before the bids are opened and 
read to the public, or any legal reason why a bidder having 
deposited a bid cannot supersede this by another proposal before 
the time for the opening and reading of such proposals ? 

"Is there any reason why this contract cannot be awarded to 
the E. W. Foley Contracting Corporation at the contract price 
named in their superseding proposal of $123,557.70 ? " 

Newton, Attorney-General. — In the awarding of contracts for 
the construction and repair of highways the Commissioner of 
Highways has prepared what is termed an " itemized proposal," 
and attached to such " itemized proposal " are certain printed 
rules and regulations of the Commission, termed " information 
for bidders," one of such rules and regulations being that 
" permission will not be given to withdraw, modify or explain any 
proposal or bid after it has been deposited with the State Com- 
mission of Highways." This is a rule or regulation of the State 
Commission of Highways which is as binding upon the Commisr 
sioner as upon the contractor. 

In Matter of Kimball v. Hewitt, 2 N". Y. Supp. 697, it is 
held that, although in cases of private contracts a bidder can 
always withdraw its offer before its acceptance, a different rule 
prevails in the case of public contracts, — the reason being that 
in public contracting all parties are operating under regulatory 
statutes and subject to the restrictions thereby imposed ; and that 
if bids were permitted to be withdrawn, the highest bidder might 
be made the lowest by the withdrawal of all other bids, thus 
inducing fraud. 

The question of withdrawal of bids is also discussed in Matter 



Right of a Contractor to Withdraw His Bid 257 

Attorney-General [Vol. 20] 

of City of New York v. Seely-Taylor Co., 149 App. Div. 98, in 
which it was held, Justice McLaughlin writing the opinion, that 
if a contractor made an unintentional mistake in its bid, then 
undoubtedly, before the bid was acted upon, it oould be with- 
drawn and the court of equity could relieve it from executing 
a contract which it never intended to make. 

The facts in the case in relation to the E. W. Foley Contracting 
Corporation's bid do not bring such bid within the ruling of the 
court in the Seely-Taylor Co. case, for the reason that no explana- 
tion is given for the attempted withdrawal of the first bid of 
$118,205.50, and no mistake, intentional or unintentional, is 
given as a reason for the attempted withdrawal of such bid. It 
appears to have been an arbitrary act on the part of the contractor 
and the attempted substitution of another bid for a sum in excess 
of $5,000 over the first bid. 

It appears that in the second bid presented by the E. W. Foley 
Contracting Corporation for the sum of $123,357.70, there is 
inserted a yellow sheet of paper, upon which is written in lead 
pencil the following: 

" This bid supersedes one formerly deposited for $118,000 and 
CK deposited for that bid applies to this one. 

" K W. Foley." 

Upon the opening of the bids there appeared to be none 
deposited by " E. W. Foley ; " neither was there a bid for $118,000. 
Presumably, E. W. Foley, as an individual, attempted to with- 
draw the bid of the E. W. Foley Contracting Corporation, which 
was for the sum of $118,205.50. 

I, therefore, conclude as a matter of law: 

First. That under the rules and regulations of the State Com- 
mission of Highways no proposal or bid can be withdrawn after 
it has been deposited with the State Commissioner of Highways. 

Second. That any paper signed by E. W. Foley as an individual 
has no binding effect upon the E. W. Foley Contracting Corpo- 
ration. 

Third. That the rule or regulation established by the State 
Statu Dipt. Kept.— Vol. 20 17 



258 State Department Reports 

[Vol. 20] Attorney-General 

» ■■■ ■ ■ ■ 

Commission of Highways prohibiting the withdrawal, modifica- 
tion or explanation of any proposal or bid after it has been 
deposited with said State Commission of Highways is as equally 
binding upon the State Commissioner of Highways as upon the 
contractor. 



In the Matter of Construing Section 282 op the Highway Law 

(Opinion dated August 9, 1919) 

Convertible cars, such as the Ford "suburban" which may be used 
for carrying passengers or freight or both at the same time, should be 
registered and licensed in accordance with the use to which they are 
or are to be put. 

Hon. Francis M. Hugo, Secretary of State, submitted an 
inquiry, together with a request for an opinion thereon, as 
follows : 

" What form of registration, under section 282 of the Highway 
Law, should be had for a vehicle such as the Ford " suburban " 
car which has three seats, of which the rear two may be removed, 
converting the car into an express wagon or light truck ?" 

Newton, Attorney-General, by Cheney, First Deputy. — Sub- 
division 1 of section 282 of the Highway Law provides that 
every owner of a motor vehicle shall file an application for regifr- 
tration containing: (a) a description of the vehicle; (b) facts 
relating to the owner; and (c) "provided that if such motor 
vehicle is used or to be used for the purposes mentioned in sub- 
division 6-a of this section, the applicant shall so certify and also 
certify as to the weight of the truck and carrying capacity, or, in 
the case of an omnibus, the seating capacity, etc." It is well to 
note that prior to the amendment effected by chapter 2 of the 
Laws of 1917, instead of basing the proviso upon the use or pur- 
pose mentioned in subdivision 6-a, the phrase was " provided that 
if such motor vehicle is used or to be used solely for commercial 
purposes, the applicant shall so certify." The law was changed 



Construction of Highway Law, Section 282 259 

Attorney-General [Vol. 20] 

by chapter 2 of the Laws of 1917 to make the purpose mentioned 
in section 6-a control instead of the " commercial " use of the car, 
in determining whether or not the registrant need give any infor- 
mation with respect to the uses of the car or its weight or capacity. 
Subdivision 6-a referred to was originally passed in chapter 598 of 
the Laws of 1916 which provided for investigation by the Commis- 
sioner of Highways, the Superintendent of Public Works and 
the State Engineer and Surveyor, with respect to wear and tear 
on the roads caused by different classes of automobiles. The 
report of those officers having been filed, subdivision 6-a was 
changed by chapter 2 of the Laws of 1917 to fix the rates at 
which auto trucks and omnibuses should pay registration fees. 
It provided a schedule of fees for "motor vehicles used as 
omnibuses for the transportation of passengers and of motor 
vehicles, commonly known as auto trucks, used for the transporta- 
tion of goods, wares and merchandise." These are the purposes 
mentioned in subdhision 6-a and referred to in subdivision 1. 

On April 5, 1917, Attorney-General Lewis rendered an opinion 
to the Secretary of State to the effect that the use to which a car 
was put was controlling in determining the kind of registration 
required, since the word " commercial " had been eliminated 
from the statute and the words " transportation of goods, wares 
and merchandise " had been substituted together with the words 
"used as omnibuses for the transportation of passengers." He 
held that although a car might be used commercially it need only 
have an " owner's " license if not used in the carrying of pas- 
sengers as an omnibus, or in the transportation of goods, wares 
and merchandise, and he held, per contra, that if a car were used 
for the purpose of transporting goods, wares and merchandise, it 
became to all intents and purposes a motor truck and should have 
a truck registration, even though it might have been constructed 
as a touring car only. 

The soundness of this opinion was never questioned in the 
courts, but a bill was promptly introduced in the Legislature to 
avoid the effect of it and make it possible for the farmers to carry * 
their produce to market in touring cars without requiring a com- 



260 State Department Repobts 

[Vol. 20] Attorney-General 

mercial license. This bill, known as the " Farmers' Bill," became 
chapter 724 of the Laws of 1917 and it amended subdivision 6-a 
of section 282 of the Highway Law to provide for a schedule of 
registration fees for " motor vehicles used as omnibuses for the 
transportation of passengers, and of motor vehicles constructed 
or specifically equipped for the transportation of goods, wares 
and merchandise and used or to be used for such purpose, and 
commonly known as auto trucks." 

Under the previous amendment the use to which a car was put 
was made the controlling factor in determining the class of 
registration and the fees to be paid. Under this last amendment 
the controlling factor was changed. It was not changed from the 
use to the shape or equipment of the car, but to a combination of 
shape or equipment and use. In order to require registration as 
a motor truck the statute was made by the last mentioned amend- 
ment to and now provides a schedule for motor vehicles used as 
omnibuses and a schedule for motor vehicles which are (1) con- 
structed or specifically equipped for the transportation of goods, 
wares and merchandise, (2) used or to be used for such purposes, 
and (3) commonly known as auto trucks. 

In his opinion of April 5, 1917, Attorney-General Lewis prac- 
tically eliminated as a controlling factor the words "commonly 
known as auto trucks " on the theory that any auto used for the 
transportation of goods became a truck within the common use of 
the word, and the question need not disturb us here as there is no 
doubt that convertible cars, when arranged for the transportation 
of freight, are commonly known as auto trucks. 

It is perfectly clear to me that the phrase " constructed or 
specifically equipped for the transportation of goods, wares and 
merchandise and used or to be used for such purpose " is a con- 
junctive and not disjunctive phrase. It does not mean that motor 
vehicles constructed or specifically equipped for the transportation 
of goods, wares and merchandise come under the schedule fixed, 
regardless of the use to which they are put, any more than it means 
that vehicles not so constructed or equipped come under that 
schedule if used or to be used for such purpose. It was for the 



Construction of Highway Law, Section 282 261 



Attorney -General [Vol. 20] 



avowed purpose of avoiding the latter construction that the 
" Farmers' Bill " was passed. If the " and " in the middle of 
the phrase is conjunctive when considered with the latter half 
of the phrase, it cannot be considered disjunctive when considered 
with the former half. 

It follows that the schedule for motor vehicles commonly known 
as auto trucks and used for the transportation of goods, wares and 
merchandise, found in the latter part of subdivision 6-a of section 
282, is only applicable to cars which are both constructed or 
specifically equipped for the transportation of goods, wares and 
merchandise and also used or to be used for such purposa 

If a gentleman owning a large estate keeps a " suburban " car 
which is used to carry members of the household to and from the 
village or the railway station and is also used, with the seats 
removed, for bringing trunks to and from the railway station or 
the village to the house, but is not used in carrying passengers 
for hire nor in carrying " goods, wares and merchandise," it is 
not subject to registration as an auto truck, even though there is 
no question that it is constructed or specifically equipped for the 
carrying of goods, wares and merchandise and even though there 
is no doubt that when the seats are out it is commonly known as 
an auto truck. 

I do not regard the carrying home for private use and con- 
sumption of all purchases as "the transportation of goods, wares 
and merchandise." As I understand the phrase " goods, wares 
and merchandise," it refers to articles of commerce, the commerce 
in which is not yet completed. A storekeeper delivering goods 
from his store or bringing goods to his store for the purpose of 
selling them, is transporting goods, wares and merchandise, but 
the householder who takes home a ham and a box of soap in his 
automobile, for consumption in the house, is not " transporting 
goods, wares and merchandise " as I understand that phrase, any 
more than a street car becomes a freight car by reason of the fact 
that it carries a school girl with a box of candy. Commerce is 
not involved. 

Similarly, if such vehicle is used by a contractor for trans- 



262 State Department Reports 

[Vol. 20] Attorney-General 

i 

porting his own men (not for hire) to the place where they are to 
work, and for carrying the tools with which they are to work, I 
do not think that this alone necessitates taking out either a truck 
license or an omnibus license. If the passenger is not carried for 
hire the car is not an omnibus, for section 281 of the Highway 
Law specifically defines omnibus as a motor vehicle held and used 
for the transportation of passengers for hire, and tools carried for 
use and not for sale are not " goods, wares and merchandise" 

Of course, as soon as such a car is used in commerce by being 
loaded with goods which are still in commerce, it becomes subject 
to the schedule of registration fees provided in subdivision 6-a, 
and of course when a car is used for the transportation of pas- 
sengers for hire it must have an omnibus registration. But 
if a car is not used in either of these ways, and the owner has no 
intention of using it or having it used in either of them, the mere 
shape of the car — the fact that it may be equipped or built for 
the transportation of goods, etc., — does not necessitate for it a 
commercial registration. 



COMPTROLLER 



In the Matter of a Question Submitted by the Supervisor 
of the Toww op Hempstead, Nassau County, Relating to 
the Duty of the Supervisor to Honor a Warrant Issued by the 
Board of Town Auditors for the Reimbursement of an Official 
for the Expense of a Trip Outside of the Town in Which 
He was an Officer 

(Dated May 26, 1919) 

The supervisor of the town of Hempstead, Nassau county, 
submitted a statement of fact and an inquiry based thereon as 
to his duty relative to the honor of a warrant issued by the 
board of town auditors for the reimbursement of an official for the 
expenses of a trip outside of the town in which he was an 
officer. The trip had not been authorized by the town board, 
which was a statutory prerequisite under subdivision 2 of section 
170 of the Town Law. 

Travis, Comptroller. — The courts have repeatedly held that 
nothing is a legal claim against a town unless it be made so by 
statute expressly or by necessary implication and that it is 
incumbent upon a person presenting a claim against the town 
to make clear that it is in all respects a legal claim and author- 
ized by some statute. It is also an established rule of law that 
a public officer is not entitled to reimbursement for expenses 
unless the law specifically attaches them to his office. 

Tn relation to town officials, it is provided in subdivision 2 
of section 170 of the Town Law that in towns having a population 
of 5,000 or more as appears by the last Federal census and 
where the assessed valuation of real estate in such towns is over 
$5,000,000 the actual and necessary expenses of such town 
officers, in which may be included traveling expenses, is a legal 
town charge provided they are incurred by authority of the 
town board of such town. It appears that the claim in question 

263 



264 State Department Reports 

[Vol. 20] Comptroller 

had not been authorized prior to its incurrence. In the case of 
Syracuse v. Eoscoe, 66 Misc. Rep. 317, the court held, so far 
as pertinent to this question, as follows: 

" Whenever a board of auditors has the power to examine and 
adjust accounts against a town or city and acts within its juris- 
diction, its decision, in the absence of fraud or collusion, is 
final. It cannot be attacked collaterally. Whether a claim is 
a proper charge, in a case where it is doubtful and rests upon 
disputed evidence, and what its amount shall be, are matters 
for the sole determination of the board. And, however mistaken 
it may be, so long as it keeps within its jurisdiction and acts in 
good faith, the audit of the board cannot be assailed. No court 
may question the exercise of its discretion or may re-examine 
the facts to determine whether it would have reached a different 
conclusion. . 

" But it, like all boards of auditors, is a tribunal of limited 
jurisdiction. It may act as far as the statute permits it to act 
and no further. If it attempts more, its action is absolutely void. 
If, for instance, an account is presented which the board, because 
of the lack of some indispensable condition, has no right to con- 
sider; if a claim is allowed which is plainly not a city charge, 
its determination would be void for the reason that it would in 
such a case have exceeded its jurisdiction. Osterhoudt v. Rigney, 
98 N. Y. 222; People ex rel. Smith v. Clarke, 174 id. 259; 
Nelson v. Mayor, 131 id. 4, 16; People v. Lawrence, 6 Hill, 
244; State v. Hastings, 10 Wis. 525." 

It will thus be observed in the present instance that the claim 
is clearly not a town charge requiring as a matter of law the 
authorization of the town board in order to make it a claim 
against the town. 

The determination of the question as to the legality of the 
charge, however, does not in itself determine the procedure for 
the supervisor to follow. As to whether or no the disbursement 
was authorized by the town board pursuant to statute is a 
question of fact which may be determined by the board of town 
auditors and whether their determination be erroneous or true 
is not within the province of the supervisor to decide. The 



Questions Presented bt Auditors of Brookhaven 265 

Comptroller [Vol. 20] 

supervisor cannot attempt to supersede the judgment of the 
board of town auditors by any conclusion which he may reach. 
If he believes the charge to be illegal, his remedy is not by 
refusing to honor the warrant but rather by way of certiorari. 



In the Matter of Questions Presented by the Chairman of 
the Board of Auditors of the Town of Brookhaven, 
Suffolk County, Relating to the Duties of the Board in the 
Administration of Town Affairs 

(Dated May 26, 1919) 

Travis, Comptroller. — The chairman of the board of auditors 
of the town of Brookhaven, Suffolk county, presents several 
questions in relation to the duties of the board in the administra- 
tion of town affairs which are hereafter answered in their order. 

(1) When it is necessary in the discharge of his duty for a 
constable to engage an automobile to convey a prisoner either to 
or from court, or to or from the county jail, should the constable 
bear any part of the expense of the automobile hire and, if so, 
what part of the expense? 

Answer. Section 740-b of the Code of Criminal Procedure 
enumerates the fees to which a constable is entitled for services 
rendered in criminal actions and proceedings. That list of fees 
contains among other things certain mileage rates to be allowed 
for traveling. The rates differ, as you will note, according to 
the kind of process to be served or the purpose for which such 
traveling is made necessary. If, in executing such a process or 
performing such a duty, the constable hires a vehicle of any kind 
or pays transportation upon a railroad or other conveyance, in 
so far as such expense may be incurred for his personal traveling 
expense, it is not a charge against your town. If, however, in 
the performance of his duties he accually and necessarily incurs 
expenses for transporting a person in custody, he is, in my 
opinion entitled to be reimbursed to that extent. In this con- 
nection, I direct your attention to the opinion of the court in 
the People ex rel. Caldwell v. Supervisors, 45 App. Div. 42, 
and particularly to the paragraph on page 54. Mr. Justice Her- 



266 State Department Reports 

[Vol. 20] Comptroller 

rick, in writing the opinion, said in reference to an item of 
six dollars and eighty-three cents charged by the sheriff for 
transporting a prisoner from Prescott to Ballston: "This, I 
think, was improperly disallowed. That was an expense incurred 
in the discharge of his duty, and is not covered by the ten cents 
a mile allowed him for traveling expenses. That, I think, refers 
to his own personal traveling expenses, and does not include 
the expense for carfare in conveying convicts to prison, or pris- 
oners accused of crime to jail." 

It seems to me that this is a case parallel with the one 
mentioned in your letter. Do not understand me as holding 
that you are required to audit all such charges made by con- 
stables. You should consider each upon its merits. If the 
constable could have used a railroad as a means of traveling 
between two points, you should in my opinion allow the rail- 
road fare of the person in custody. If no railroad traverses the 
section, then you should allow a sum equivalent to the economical 
rate to be obtained; that is to say, if it is cheaper to hire a 
livery than to engage an automobile, the livery rig should be 
employed. You should also give consideration to the fact that a. 
constable is not entitled to have his own transportation charge 
paid, and for that reason you should consider whether or not the 
vehicle charge should not be apportioned so that the constable pays 
a proportionate part for its use in conveying him, and the town 
pay its just proportionate part of the cost of transporting the 
person in custody. 

(2) If more than one prisoner is conveyed at the same time, 
what proportionate share of the expense, if any, should the 
constable pay? 

Answer. I believe the discussion and the answer to question 
1 is sufficiently clear as to be inclusive of this question. 

(3) A member of the board of audit lives at Setauket. The 
only way he can get to the board meeting is by automobile. If 
he uses his own car, which he has been doing, it will cost the town 
two dollars per trip. If he has to hire his passage, it will cost at 
least five dollars per trip. What is his legal duty and that of 
the board of audit in this matter? 



Questions Presented bt Auditors of Brookhaveit 267 

Comptroller [Vol. 20] 

Answer. The board of auditors undoubtedly has authority 
to audit and allow claims for expenses actually and necessarily 
incurred by reason of the authority granted it in paragraph 2 
of section 170 of the Town Law, if authorized by the town board. 
In part it reads as follows: " The contingent expenses necessarily 
incurred * * * in any town having a population, as appears 
by the last federal census, of five thousand or more, and where the 
assessed valuation of real estate in such town is over five million 
dollars, the actual and necessary expenses of such town officers for 
vehicle hire, traveling expenses, * * * as may be incurred 
by authority of the town board of such town." 

We must first ascertain whether the town board of your town 
has authorized town officers to charge traveling expenses against 
the town. Brookhaven in one of the towns to which the fore- 
going quotation applies. If its town board has decreed that the 
traveling expenses of town officers shall be town charges, you 
may then consider whether the expenses you have in mind are 
" actual and necessary.'* For an expense to be actual, it must 
be found that it was incurred truly, really and in fact, as dis- 
tinguished from pretended or feigned. 

With reference to the bill of the member of the board of 
audit, who uses his own automobile, the expenses are not actual. 
They are constructive or pretended. If it be found that the 
expenses have been actually incurred, it then becomes your duty 
to decide whether or not they were necessary. Not every expense 
which is actual is necessary. A necessary expense is one which 
is suitable, appropriate and customary in the performance of the 
official duty. It is a question of fact for you to determine whether 
an expense was necessary. 

If a town officer hires an automobile to traverse the distance 
between two points already connected by some public conveyance, 
it cannot ordinarily be said that the expense is necessary. If 
he employ an aeroplane where an automobile would suffice, the 
aeroplane service cannot be said to be necessary. If he employ 
a Packard car where a Ford runabout would answer, the expense 
of the larger car is unnecessary. If a Ford runabout be hired 
when some other cheaper method of travel is usual, appropriate 



268 State Departmeih: Reports 

[Vol. 20] Comptroller 

and customary, then in such a case the hire of the Ford car cannot 
be said to be necessary. I mention these instances to indicate 
that it is wise for the board of audit to determine the necessity 
for the expenditure, even though the expenditure be actuaL 

Now, with reference to the use by an official of his own auto- 
mobile, I refer you to an opinion of the Attorney-General, 7 
State Dept. Rep. 520. In this opinion the Attorney-General 
held that per diem allowances to a superintendent of 
highways are not legal, nor is a town board authorized 
to pay a town superintendent of highways for the use 
of his automobile, but may allow him the amount actually and 
necessarily expended by him in the purchase of needed sup- 
plies for such machine when he is engaged upon town busi- 
ness. I believe that the reasoning of the Attorney-General 
is applicable in this instance and I quote his language 
verbatim : " I desire to say that while it would be fair and 
equitable as between the town and superintendent of high- 
ways, that he should be paid for the use of his own auto- 
mobile while engaged upon official work, if the wear and tear 
thereof could be accurately measured, it has been a long estab- 
lished rule of practice in this state that if a trustee or public 
official uses his own conveyance *in the discharge of his duties, 
he is not entitled to compensation for such use, but I think 
his actual expenditures for gasoline and oil used upon his trips 
while at work for the town, would be a legitimate charge against 
the municipality. By using his automobile the superintendent adds 
to his general efficiency, and the value of his services to the 
town are proportionately increased, and the amount of both 
gasoline and oil can be definitely ascertained, and are actual and 
necessary expenses incurred by him in the line of his work and 
are therefore proper charges against the town, and should be 
paid upon a verified statement of the amount so used when he 
is absent from home on official work." 

(4) In other words, in a broad sense, if the board of audit 
can save money for the town of Brookhaven in such and like 
manner, has it a legal right to do so ? 



Questions Presented by Auditors of Brookhaven 269 

Comptroller [Vol. 20] 

Answer. The board of audit should at all times aid an eco- 
nomical administration when possible to do so in the light of the 
statutes and decisions affecting their interpretation. In the ques- 
tion heretofore discussed, it might at first appear to be the better 
policy to allow a flat rate for the use of automobile than to com- 
pel the official to depend upon public conveyances at a higher rate 
per trip, but upon reflection no one can doubt the wisdom of the 
general rule. 

(5) Is a constable's charge for the watching, care and trans- 
portation of a suspected insane person upon the order of the 
town health officer in an emergency case (so termed by health 
officer) a legal charge against the town? 

Answer. Section 88 of the Insanity Law enumerates certain 
relatives who are primarily responsible for the care of an insane 
person and the section further provides that if the persons named 
therein neglect or refuse to make the requisite provision for the 
care of the insane person, then the health officer of the town, 
village or city is required to apply, or cause application to be 
made, to a judge for an order of commitment. By the last sen- 
tence of the same section the costs and expenses of the health 
officer, — and the constable's claim is included in thai class — 
when allowed by the judge or justice ordering the commitment, 
are made a charge upon the town, city or county liable for the 
costs of commitment of an insane person under the Insanity Law, 
and are required to be paid in the manner prescribed by section 
84:' of that statute. In no other case is the health officer or any 
other person, except poor officers when directed by the health 
officer, authorized to make application for the commitment of 
an insane or alleged insane person or incur expenses in that 
relation. And all such fees and expenses of the health .officer 
are to be audited and allowed by the judge or justice ordering 
the commitment. 

By section 84, authority to determine and allow such expenses 
is limited to cases wherein a judge orders a commitment or hears 
an application. This precludes expenses when, upon the pre- 
liminary examination, the patient is pronounced sane. In such 
a case no hearing is held and no commitment made and claims 
for service must be presented to and audited by local authorities. 



270 State Department Reports 



[Vol. 20] Comptroller 



Information Relating to the Income Tax Law, Article 16 
of the Tax Law, Added by Chapter 627 of the Laws of 1919 

(Dated June, 1919) 

Travis, Comptroller. — New York State has adopted the plan 
of taxing individuals on their incomes. The bill establishing 
the system became a law on May 14, 1919. It is now operative 
and affects the residents and nonresidents of the State. 

It is realized that individuals differed in their opinions respect- 
ing the merits or demerits of this new plan of taxation, but now 
that the law is a fact personal views should be submerged in an 
honest endeavor to comply with legal requirements. 

The duty of administering the act is imposed on the Comp- 
troller. I shflll strive to execute the powers conferred according 
to the purposes and the intent of the act and in a manner fair 
alike to the State and to the individuals affected thereby. In that 
effort I am hopeful of having the earnest and hearty co-operation 
of all citizens. 

This act is of such importance that immediate and accurate 
information respecting its provisions should be made available 
for the great body of taxpayers affected thereby. It is for that 
reason that this bulletin is being published. Later, when rules and 
regulations have been formulated and adopted, a second bulletin 
will be published. It is thought that the information contained 
in this pamphlet is accurate but closer study of the law and rules 
and regulations when established, may require the amplification 
or the modification of some of the answers herein given. If that 
be tM case, all such changes will be noted in future bulletins. 

The Law 

• 1. What is the Income Tax Law? 
It is article 16 of the Tax Law, added by chapter 627, Laws 
of 1919. 



Information Relating to Income Tax Law 271 

Comptroller [VoL 20] 

2. What is Us purpose and intent? 

The obvious purpose and intent of the law is that, commencing 
with 1919, all gains, profits and income of residents, from all 
sources, and of nonresidents, from sources within the State, shall 
be charged and assessed, unless expressly exempted, with an 
income tax at progressive rates, and that such tax shall be paid 
by the owner of such income or by the proper representative 
thereof having the receipt, custody, control or disposal of the 
same. 

The Tax 

3. What are the rates of tax? 

The tax is imposed at graduated rates : 1 per cent on the first 
$10,000 of taxable income, 2 per cent on the next $40,000, and 
3 per cent on taxable income in ekcess of $50,000. 

4. Are any surtaxes imposed? 
No. 

5. Does the State Income Tax Law resemble titles I and II of 
the Federal Revenue Act of 1918f 

Yes; in respect of individuals, it conforms closely to them. 
Many provisions of the State act are identical with those con- 
tained in the Federal statute. 

6. Is one's entire income taxed? 

No. Put simply, the law provides that to arrive at the amount 
of " taxable income " one 

(a) need not include income of certain characters (see ans- 
wers 39 and 41) in computing " gross income;" 

(b) may subtract from "gross income " certain deductions 
(see answer's 42 and 44) to arrive at " net income ;" 

(c) is allowed, if a resident, personal exemption according to 
status (see answer 49), as a deduction from " net income," in 
calculating " taxable income " (an exception to this rule is stated 

in answer 49) ; 

(d) is allowed, under certain conditions, if a nonresident, 
credit for a ratable portion of income taxes paid to the state or 
country of his residence (see answer 51). 



272 State Department Reports 



[Vol. 20] Comptroller 



7. When is the first tax payable? 

On or before March 15, 1920, in respect of income of 1919. 

8. Where and to whom is it to be paid? 

To the State Comptroller, at his offices in Albany and New 
York city, unless the State is districted and branch offices estab- 
lished. (This question will be more fully answered in a bulletin 
to be published later when plans are fully worked out.) 

9. Can remittances be made through the mail? 

Yes; that plan is preferable (The instructions which will 
accompany return blanks will cover this point.) 

10. Should the remittance accompany the return? 
Yes. § 377. 

11. Is it legal to contract to pay another's income tax? 

No. It is unlawful for any person to agree or contract, directly 
or indirectly, to pay or assume to bear the burden of any tax 
payable by a taxpayer under the law. Any such contract is null 
and void and incapable of enforcement by any court § 385. 
This does not apply to the withholding of the tax in whole or in 
part, by a withholding agent, in case of a nonresident § 366. 

12. Is the income tax a substitute for some other tax? 

Yes; to a limited extent. It is provided that after July 31, 
1919, no personal property assessment shall be made on any 
assessment-roll of a city, town, village, school or other special 
tax district on account of the following, if the income therefrom 
be subject to the tax imposed by the Income Tax Law: 

(a) Money on hand, on deposit or at interest 

(b) Bonds, notes and choses in action, and 

(c) Shares of stock in corporations other than banks and 
banking associations 

if such be owned by any individual or constitute a part of a 
trust or estate subject to the income tax. Otherwise, the income 
tax is in addition to all other taxes imposed by law. § 352. 

The proper construction of this section seems to be that indi- 
viduals may and should be assessed on account of intangibles, of 
the characters mentioned above as personal property, in all tax 



Iotobmation Relating to Income Tax Law 273 



Comptroller [Vol. 20] 



districts where the assessments are required by law to be made 
prior to July 31, 1919, but that thereafter no personal property 
assessments can be based thereon. 

13. May a valid tax be levied on such cm assessment an or after 
August 1, 1919 ? 

Yes. The proper construction of section 352 of the Tax Law 
and of section 3 of article 16 thereof seems to be that if a valid 
personal property assessment, of the character described in the 
last preceding answer, is made prior to August 1, 1919, a valid 
tax may be levied thereon after that date. 

14. How are the taxes collected by the Comptroller to be 
applied? 

The Comptroller is required (a) to retain a fund of $250,000 
from which to pay refunds and abatements to taxpayers ; (b) of 
the remainder, 50 per cent is to be paid to the treasury of the 
State and used for and applied to State uses and purposes; (c) 
the remaining 50 per cent is to apportioned periodically — at 
least once in three months — by the Comptroller, and paid to 
the treasurers of the several counties of the State in the propor^ 
tion that the assessed valuation of the real property of each 
county bears to the aggregate assessed valuation of the real prop- 
erty of the State. In the case of counties included in the city of 
New York, payments shall be made to the receiver of taxes of 
such city. § 382. 

15. How will the portion paid to a county treasurer outside of 
Oreaier New York be applied ? 

The county treasurer of each county is required to apportion 

the amount received among the several towns and cities within 

the county in the proportion that the assessed valuation of real 

property of each town or city bears to the aggregate assessed 

valuation of the real property of the county. In the case of a city, 

he shall pay the amount apportioned to its chief fiscal officer to be 

used for general city purposes. In the case of a town, he shall 

credit the amount apportioned against the county tax payable by 

a town. If the amount apportioned exceeds the town's share of 
State Dept. Kept.— Vol. 20 18 



274 Stats Depabtmbitt Reports 

[Vol. 20] Comptroller 

the county tax, the excess shall be paid to the supervisor to be 
applied to general town uses and purposes. In the case of the 
city of New York, the shares of the several counties wholly con- 
tained within the city shall be paid into the general fund for the 
reduction of taxation of the city. 

PSBSONS TAXXD 

16. Who is an income taxpayer? 

Any person, trust or estate who or which is subject to, «r 
whose income is, in whole or in part, subject to a tax imposed by 
article 16 of the Tax Law. 

17. Upon whom or the incomes of whom is a tax imposed? 

A tax is imposed in respect of the incomes of (a) residents and 
(b) nonresidents. 

18. Who is a resident? 

A natural person, not a transient, is a resident of the State 
for purposes of the income tax. Whether or not one is a tran- 
sient is determined by his intentions with regard to his stay. A 
person who becomes a resident of the State at any time before 
March 15 of the next succeeding calendar year is a resident of 
the State for the calendar year for purposes of the income tax. 
§ 350, subd. 7. 

19. Who is a nonresident? 

A person is a nonresident, within the meaning of the act, if 
he receives taxable income from property owned or from a busi- 
ness, trade, profession or occupation carried on in the State but 
is not a resident thereof. 

20. Is an alien taxable under this act? 

Yes; accordingly as the tax is imposed on him if a resident, 
or upon his income if a nonresident. 

21. Is a corporation taxable under this law? 

No. A corporation is taxable under other provisions of law. 

22. May a minor be a taxpayer? 

Yes. A minor, as such, is not exempt* 



Information Relating to Income Tax Law 275 



Comptroller [Vol. 20] 



23. Is a partnership liable to a tax? 

No, but the members of the partnership are, as individuals. 
The law, in effect, ignores the partnership's existence as an inde- 
pendent entity and imposes no tax against it, but each individual 
member of a partnership is taxed on his share of the partnership's 
" net income," whether distributed or not § 364. 

24. Who is a " fiduciaryr 

An individual or corporation acting in a fiduciary capacity 
for any person, trust or estate ; as, for instance, a guardian, trus- 
tee, executor, administrator, receiver or conservator. § 350, 
subd. 5. 

25. Is a fiduciary a taxpayer? 

Technically, no; practically speaking, yes, because a fiduciary 
is responsible for the payment of the tax imposed on the income 
received by certain estates or trusts. § 365. See answers 41 
and 42. 

Year — Taxable and Fiscal 

26. What is a taxable year? 

The words " taxable year " mean the calendar year or the fiscal 
year upon the basis of which " net income " is computed. § 350, 
subd. 4. 

27. What is a fiscal year? 

The words " fiscal year " mean an accounting period of twelve 
months, ending on the last day of any month other than Decem- 
ber. § 350, subd. 4. 

27a. What is the first taxable year? 

The calendar year 1919, or that part of a fiscal year ending in 
1919, between January 1, 1919, and the end of such fiscal year. 

28. Must one return income for a calendar year? 

No; in reporting income of 1919, one may elect whether to 
report for the calendar year or for a fiscal year ending during 
such a calendar year. This statement is subject to the following 
qualifications: (1) That "net income" must be computed 
upon the basis of the taxpayer's annual accounting period. (2) If 
his annual accounting period is other than a fiscal year, as defined, 



276 State Department Reports 

[Vol. 20] Comptroller 

or if lie has no accounting period or does not keep books, then 
"net income" must he computed on the basis of the calendar 
year. § 358. The return shall be made" for the same accounting 
period as that used for the Federal return, if such basis clearly 
reflects income. 

29. // one reports income for a "fiscal year" ending during 
1919, is a tax imposed on the "net income " for the entire fiscal 
year? 

No. It is said in section 351 : 

" Such tax shall first be levied, collected and paid in the 
year 1920 upon and with respect to the taxable income for the 
calendar year 1919, or for any taxable year ending during the 
year 1919," 

but that statement must be construed in conjunction with the 
following quotation from section 370 : 

" If a taxpayer making his first return for income tax keeps 
his accounts on the basis of a fiscal year, he shall make a separate 
return for the period between the beginning of a calendar year in 
which such fiscal year ends and the end of such fiscal year. 

" In all of the above cases the net income shall be computed on 
the basis of such period for which separate return is made and 
the tax shall be paid thereon at the rate for the calendar year in 
which such period is included." 

The taxpayer who keeps his accounts by a fiscal year, as 
defined, will, in 1920, for 1919, unless he elects to change to the 
calendar year, file two returns with the Comptroller, one for 
the fiscal year, and one for the period commenced January 1, 
1919, and ended on the date of the ending of his fiscal year. The 
two returns are needed in the first year because of the necessity 
of having the income and expenses of the entire year in order to 
determine the taxable income for the portion of the year. His 
tax will be calculated on the " net income " disclosed by the report 
for the shorter period. 

30. If one reports in the first instance according to the calen- 
dar year, may he later change to a fiscal year? 

Yes, if he first obtains the consent of the Comptroller. 



Information Relating to Income Tax Law 277 



Comptroller [Vol. 20] 

31. If one reports in the first instcvnce for a fiscal year, may 
he later change to the calendar year? 

Yes, if he first obtains the consent of the Comptroller. 

32. If one is a member of a partnership and calculates his 
" net income " upon a basis of a period different from thai upon 
the basis of which the " net income " of the partnership is com- 
puted, what must he return as his share of the " net income " of 
the partnership? 

He is required to return his distributive share of the "net 
income" of the partnership for any accounting period of the 
partnership ending within the fiscal or calendar year upon the 
basis of which his " net income " is computed. § 364. 

33. Is that true of 1919 income returns? 

This question will be more fully answered by rules and regu- 
lations hereafter promulgated. Quite likely in such a case the 
individual will be required to include in his return only his dis- 
tributive share of the " net income " of the partnership earned 
after January 1, 1919, and before the end of the partnership's 
fiscal year. 

Income — Gross, Net and Taxable 

34. What is income? 

Income, in a broad, general way, means all wealth which flows 
into a taxpayer other than as a mere return of capital. It includes 
"gains and profits," including gains derived from the sale, 
exchange or other disposition of capital assets. It is not limited 
to cash alone. The statute recognizes as income^determining 
factors other items, among which are inventories, accounts receiv- 
able, property exhaustion and accounts payable for expenses 
incurred. 

35. What is "gross income?" 

" Gross income " means income in the broad sense, less such 
items thereof as are specifically exempted by statutory provisions. 

36. What is " net income?" 

That which remains of " gross income " after subtracting the 
deductions allowed by law, is " net income." 



278 State Department Reports 

[Vol. 20] Comptroller 

37. What is " taxable income?' 

"Taxable income" is what remains of "net income" after 
deducting the personal exemption, if any, allowed by section 
362, or the credit, if any, granted by section 363. It is the base 
upon which the income tax is calculated. 

38. Does " gross income " have the same meaning with refer- 
ence to both residents and nonresidents? 

No. In general, with reference to residents, it means income 
from all sources within and without the State, and, as applied 
to nonresidents, it means income from all sources within the State 
only. 

39. Whai constitutes the " gross income " of a resident? 

It is the total of every item of income derived from all sources 
whatever except those enumerated in paragrphs " f " to " n " of 
this answer, received or accrued during the taxable year for 
which a return is rendered, whether in cash or its equivalent. It 
includes gains, profits and income derived: 

(a) From salaries, wages or compensation for personal service, 
of whatever kind and in whatever form paid. 

(b) From professions, vocations, trades, businesses, commerce, 
sales, dealings in property, whether real or personal growing out 
of the ownership or use of or interest in such property. 

(c) From interest, rent, dividends, securities. 

(d) From the transaction of any business carried on for gain 
or profit. 

(e) From any other source whatever. 

It excludes the following items, which are exempt: 

(f ) Proceeds of life insurance policies paid upon the death 
of the insured to individual beneficiaries or to the estate of the 
insured. § 359, subd. 2, | " a." 

(g) Amounts received as a return of premium or premiums, 
by the insured under life insurance, endowment or annuity con- 
tracts. § 359, subd. 2, | "b." 

(h) Amounts received for personal injuries or sickness, through 
accident or health insurance or under workmen's compensation 
acts. § 359, subd. 2, | " e." 



Information Relating to Income Tax Law 279 



Comptroller [Vol. 20] 



(i) Damages received, whether by suit or agreement on account 
of injuries or sickness, or through the war risk insurance act or 
any law providing relief for injured or disabled members of the 
Federal military or naval forces. § 359, subd. 2, | " e." 

(j) Gifts, bequests and devises; but income from these is not 
exempt. § 359, subd. 2, f " c." 

(k) Compensation received from the United States by officials 
or employees thereof, including persons in the military or naval 
forces. § 359, subd. 2, 1 " f." Seemingly, this includes, also, 
persons in the employ of railroads under Federal control so long 
as they remain under such control. 

(1) Interest upon (1) obligations of the United States or its 
possessions, (2) securities issued under the farm loan act of July 
17, 1916, or (3) by the war finance corporation, and (4) obliga- 
tions of the State of New York and of the municipal corporations 
or political subdivisions thereof. § 359, subd. 2, t " d." 

(m) Interest on investments upon which the investment 
tax has been paid since June 1, 1917, under section 331 of the 
Tax Law, for the years for which such tax shall have been paid. 
§ 359, subd. 2, | " d." 

(n) Income received by officers of certain religious, benevolent, 
educational, scientific and eleemosynary denominations or institu- 
tions, and cemetery associations, if used exclusively for carrying 
out such purposes. § 359, subd. 2, | " g." 

40. In what respects does the Federal definition of "gross 
income" (a) agree with and (b) differ from that contained w 
the State law? 

(a) It agrees with the State definition in respect of para- 
graphs "b," "c," "d," "e," "f," "g," "h," "i," and 
ki j " of the last preceding answer. 

(b) It differs from the State definition in the following main 
respects: 

1. With reference to paragraphs " a " and " k " the Federal 
act includes in " gross income " the compensation received by 
Federal officers and employees, and so much of . the salary or 
compensation received during the present war for active service 



280 State Department Repoets 

[Vol. 20] Comptroller 

by a person in the military or naval forces of the United States 
as exceeds $3,500. Furthermore, under the Federal statute, the 
Commissioner of Internal Eevenue has determined (art. 71, reg. 
45 ; Treasury decision 2843) that compensation paid its officers 
and employees by a State or political subdivision thereof is not 
taxable. As has been seen, the State act expressly exempts com- 
pensation received from the United States by Federal officers and 
employees, and of persons in the military or naval forces of the 
United States. On the other hand, it does not exempt compensa- 
tion of State and municipal officers and employees, nor has the 
Comptroller the power to promulgate a regulation exempting such 
income. 

2. The provision of the Federal act corresponding with para- 
graph " 1 " of the last preceding answer exempts the obligations 
of the United States or its possessions and bonds issued by the 
War Finance Corporation, but provides, in relation to obligations 
of the United States issued after September 1, 1917, and in 
relation to bonds issued by the War Finance Corporation, that the 
interest shall be exempt only if and to the extent provided in 
the respective acts authorizing the issue thereof, as amended and 
supplemented. The State law exempts entirely the interest from 
those securities. On the other hand, the Federal statute exempts 
interest upon the obligations of all States, Territories, or political 
subdivisions thereof, or the District of Columbia, while the State 
act exempts only interest on the obligations of the State of New 
York and the municipal corporations or political subdivisions 
thereof. 

3. The exemption enumerated in paragraph " m " of the last 
preceding answer is original in the State law. No similar or 
substantially similar exemptions are found in the Federal statute. 

4. The Federal act contains an exemption analogous to " n " 
of the last preceding answer, as will be found upon examination 
of section 231 of the Federal statute. 

5. The Federal act does contain other specific exemptions of 
income, as, for instance, the income of foreign governments and 
income accruing to States, Territories, etc., which are not paral- 



Information Relating to Incoms Tax Law 281 

Comptroller [Vol. 20] 

leled in the State law, but, as the State income tax is imposed 
only in respect of natural persons, resident or non-resident, and 
estates and trusts, these differences appear immaterial. 

41. What different meaning does " gross income " have as to 
a non-resident? 

In the case of a nonresident, "gross income" has substan- 
tially the same meaning as in the case of a resident, except 
that income from sources without the State is excluded. Neither 
does it include annuities, interest on bank deposits, bonds, notes 
or other interest-bearing obligations, and dividends from cor- 
porations, except to the extent which such income shall be a part 
of income from any business, trade, profession or occupation 
carried on in this State subject to taxation under this law. 
§ 359, subd. 3. 

42. What items may a resident deduct from " gross income " 
to ascertain "net income " from all sources? 

In arriving at "net income/' a resident may deduct from 
" gross income " the following items : 

(a) All the ordinary and necessary expenses paid or incurred 
during the taxable year in carrying on any trade or business, 
including reasonable compensation for personal services actu- 
ally rendered, and certain rentals. § 360, subd. 1. 

(b) Such proportion of the total interest paid or accrued 
during the taxable year on indebtedness as his "net income" 
from all sources bears to his total income from all sources. 
§ 360, subd. 2. 

(c) Losses sustained, if incurred in trade or business during 
the taxable year, and not compensated for by insurance or other- 
wise. § 360, subd. 4. 

(d) Losses sustained in any transaction entered into for profit 
though not connected with a trade or business, if not compen- 
sated for by insurance or otherwise. § 360, subd. 5. 

(e) Losses sustained during the taxable year of property not 
connected with the trade or business, if arising from fires, 
storms, shipwrecks or other casualty, or from theft and not com- 
pensated for by insurance or otherwise. § 360, subd. 6. 



282 State Department Reporti 

[Vol. 20] Comptroller 

(f ) Debts ascertained to be worthless and charged off within 
the taxable year. § 360, subd. 7. 

(g) A reasonable allowance for the exhaustion, wear and tear 
of property used in the trade of business, including a reasonable 
allowance for obsolescence. § 360, subd. 8. 

(h) Taxes other than income taxes, paid or accrued within 
the taxable year, imposed (1) by authority of the United States 
or of any of its possessions, (2) by authority of aihy State or 
territory, or municipality or taxing subdivision thereof, not 
including those assessed against local benefits of a kind tending 
to increase the value of the property assessed, and (3) by 
authority of any foreign government. § 360, subd. 3. 

(i) In general, in the case of mines, oil and gas wells, other 
natural deposits, and timber, a reasonable allowance for deple- 
tion and for depreciation of improvements in the manner pro- 
vided by law and according to rules and regulations to be estab- 
lished by the Comptroller. § 360, subd. 9. 

(j) Contributions or gifts, not in excess of 15 per cent of 
the taxpayer's "net income" as computed without the benefit 
of this deduction, made within the taxable year to corporations 
or associations incorporated or organized under the laws of this 
State and operated exclusively for religious, charitable, scientific 
or educational purposes, or for the prevention of cruelty to 
children or animals, no part of the net earnings of which inures 
to the benefit of any private stockholder or individual, or to the 
special fund for vocational rehabilitation authorized by section 
7 of the act of Congress, known as the Vocational Rehabilitation 
Act. This deduction to be allowed only if verified under rules 
and regulations prescribed by the Comptroller. § 360, subd. 10. 

43. In respect of residents, do the foregoing deductions differ 

m 

from those allowed by the Federal statute? If so, to what 
extent? 

Yes, to some extent. 

The deductions enumerated in paragraphs " a," " f " and " g " 
are allowed by both acts. 

With reference to paragraph "b," the State deduction is on 



Infobmation Relating to Income Tax Law 283 



Comptroller [Vol. 20] 



the basis stated above. The corresponding Federal provision 
reads as follows: 

"All interest paid or accrued within the taxable year on 
indebtedness, except on indebtedness incurred or continued to 
purchase or carry obligations or securities (other than obli- 
gations of the United States, issued after September 24, 1917), 
the interest upon which is wholly exempt from taxation under 
this title as income to the taxpayer * * *." 

While the language of the State statute, stated in paragraphs 
"c," "d" and "e" is identical with that contained in the 
Federal act, the basis for determining such losses in the case of 
property acquired prior to January 1, 1919, will be the fair 
market value as of that date. In that respect, the determination 
of such losses differs from the determination under the Federal 
law. 

In relation to paragraph " h," the corresponding Federal pro- 
vision authorizes the allowance as a credit, to a citizen, any income 
war profits and excess profits taxes paid during the taxable 
year to any foreign country upon income derived from sources 
therein or to any possession of the United States, and, to a 
resident of the United States, any such taxes paid during the 
taxable year to any possession of the United States. The State 
statute does not permit those deductions. Furthermore, the 
Federal act permits the taxpayer to deduct all taxes paid or 
accrued within a taxable year or imposed by the authority of any 
State or territory, or any municipal or taxable subdivision of 
any State or territory. The State law limits the deduction to 
" taxes other than income taxes." 

The wording of the deduction stated in paragraph "i," in 
the State law, is identical with that contained in the Federal 
statute, except that January 1, 1919, is substituted for March 
1, 1913. This will require the fixing of a fair market value 
of properties developed or existing on January 1, 1919, as of 
that date rather than as of March 1, 1913, as specified in the 
Federal act. 

With reference to the deduction specified in paragraph "j," 



284 State Dbpabtment Report* 



[Vol. 20] Comptroller 



the Federal statute permits the taxpayer to deduct contribu- 
tions or gifts to corporations organized and operated exclusively 
for religious, charitable, scientific or educational purposes or 
for the prevention of cruelty to children or animals, etc., with- 
out restriction as to the place of incorporation, whereas the 
New York statute restricts such deductible contributions to those 
corporations only which are incorporated by or organized under 
the laws of New York State. This applies alike to residents and 
non-residents. 

44. In what respects, if any, do the deductions allowed nonr 
residents differ from those allowed residents, as staled in 
answer 42 ? 

They differ fundamentally in that they are allowed only " if, 
and to the extent that, they are connected with income arising 
from sources within the State." Subject to that qualification, 
non-residents are entitled to deductions enumerated in para- 
graphs " a," " c," " f ," " g," " h " and " i." 

The provision corresponding to paragraph " b " in answer 42, 
allows a non-resident to deduct the proportion of interest paid 
or accrued within the taxable year on indebtedness, which the 
amount of " gross income " from sources within the State bears 
to the taxpayer's "gross income" from all sources within and 
without the State. 

The deductions stated in paragraphs " d " and " e " are allowed 
non-residents only in respect of transactions or of property 
within the State. 

Deduction " j " is identical for residents and non-residents. 

45. What items of expense a/re named in the law as non- 
deductible in calculating that income? 

It is specifically provided in section 361 that no deduction 
shall be allowed in respect of (a) personal, living or family 
expenses; (b) any amount paid out for new buildings or for 
permanent improvements or betterments made to increase the 
value of any property or estate; (c) any amount expended in 
restoring property or in making good the exhaustion thereof, 
for which an allowance is or has been made; (d) premiums paid 



Information Relating to Income Tax Law 285 



Comptroller [Vol. 20] 



on any life insurance policy covering the life of any officer, 
employe or person financially interested in any trade or busi- 
ness carried on by the taxpayer, if the taxpayer is directly or 
indirectly a beneficiary under such policy. § 361. 

46. How is the " net income " of a partnership to he computed ? 
It is to be computed in the same manner and on the same 

basis as is provided for computing the "net income" of indi- 
viduals, except that the deduction provided in subdivision 10 of 
section 360 (See question 42 "j") is not allowable, and the 
personal exemptions stated in section 362 shall be allowed only 
to the individual partners. § 364. 

47. How shall the "net income*' of cm estate or trust be 
computed? 

It shall be calculated on the same basis as that provided for 
individual taxpayers, except that there shall also be allowed 
as a deduction any part of the " gross income " which, pur- 
suant to the terms of the will or deed creating the trust, is, 
during the taxable year, paid to or permanently set aside for 
(a) the United States, any State, territory, or any political 
subdivision thereof, or the District of Columbia, and (b) any 
corporation or association organized and operated exclusively 
for religious, charitable, scientific or educational purposes, or 
for the prevention of cruelty to children or animals, if no part 
of the net earnings of such corporation or association inures 
to the benefit of any private stockholder or individual. § 365, 
subd. 2. 

48. To what allowable deductions and exemptions are estates 
and trusts entitled? 

For the purpose of taxation, the income of estates and trusts 
may be divided into the following classes : 

(1) Income received by estates of deceased persons during 
the period of administration or settlement ; 

(2) Income accumulated in trust for the benefit of unborn 
or unascertained persons, or persons with contingent interests ; 

(3) Income held for future distribution under the terms of a 
will or trust ; 



286 State Department Reports 

[Vol. 20] Comptroller 

(4) Income which is to be distributed to the beneficiaries 
periodically, whether or not at regular intervals ; 

(5) Income collected by the guardian of an infant to be held 
or distributed as the court may direct ; 

(6) Income of the estate of any deceased person which, during 
the period of administration or settlement, is properly paid or 
credited to any legatee, heir or other beneficiary. 

An estate or trust falling within the first three classes enumer- 
ated above is taxed as an entity and the tax must be paid 
directly by the fiduciary. In such a case, there is allowed in 
determining " net income " of the estate of any deceased person 
during the period of administration or settlement, the amount 
of income properly paid or credited to any legatee, heir or 
other beneficiary, which income is taxable directly to the bene- 
ficiary, see (6) above and, as an exemption, the personal exemp- 
tion provided for a single person. 

In case of an estate or trust falling within classes four, five 
and six, the income is required to be reported in the return of 
the beneficiary taxpayer and the tax paid directly by him or it 

Exemptions 

49. What personal coemptions are allowed resident taxpayers 
in calculating taxable income? 

For the purpose of allowing personal exemptions, resident 
taxpayers are divided into two classes: (a) single persons and 
married persons not living with husbands or wives, who are not 
the heads of families, and (b) single persons and married per- 
sons not living with husbands or wives, who are the heads of 
families, and married persons who live with husbands or wives. 

To a person in the first class, an exemption of $1,000 is 
allowed. A person in the second class is entitled to an exemp- 
tion of $2,000, but a husband and wife living together may have 
but one exemption. In both cases an additional $200 for each 
dependent, other than husband or wife, if such dependent is 
under eighteen years of age or is incapable of self-support 
because mentally or physically defective, is allowed. The only 



Information Eelating to Income Tax Law 287 

Comptroller [Vol. 20] 

exception to this rule is that a taxpayer receiving salary, wages 
or other compensation from the United States as an official 
thereof is entitled to only so much of the personal exemption as 
is in excess of the aggregate amount of such salary, wages or 
other compensation. § 362. 

50. Are the personal exemptions stated in the last preceding 
answer allowed nonresident taxpayers? 

No. 

51. Is a non-resident taxpayer allowed any exemption or credit 
deduction from " net income " in calculating " taxable income? " 

Yes. While such a taxpayer is not entitled to the personal 
exemption stated in answer 49, if he becomes liable to income 
tax to the State or country of his residence upon his "net 
income" for the taxable vear derived from sources within this 
State, he will be credited on his New York State income tax with 
such proportion of income tax paid by him to the State or country 
of his residence as his income subject to taxation under the law 
of this State bears to his entire income upon which the tax is 
payable to the State or country of his residence, if the laws of 
that State or country grant a substantially similar credit to 
residents of this State subject to income tax under its laws. 

52. May a partnership claim for the individual partners the 
personal exemptions stated in answer 49 ? 

No; those exemptions may be allowed only to the individual 
partners upon their returns. 

53. Are the personal exemptions enumerated in answer 49 ever 
allowed an estate or trust? 

Yes; the exemption granted a single person is allowed in that 
class of cases in which a trust or estate is taxed as an entity, as 
stated in subdivison 3 of section 365. Ans. 48. 

■ 

Method of Calculating Income, Gain and Loss 

54. May a taxpayer calculate income according to the method 
of accounting regularly employed in keeping his boohs? 

Yes; he must return his income in accordance with his books, 



288 State Department Reports 

[Vol. 20] Comptroller 

subject to the authority of the Comptroller to require another 
method if, in his judgment, the books do not clearly reflect 
income. If he keeps no books, the Comptroller determines the 
method of computing income. 

55. // it does not clearly reflect income or if no books a/re 
kept, how shall income be calculated f 

It shall be calculated upon such basis and in such manner 
as, in the opinion of the Comptroller, clearly reflects income. 
§ 358. Rules and regulations to be promulgated will more fully 
answer this question. 

56. How should one ascertain gain or loss sustained from the 
sale of property? 

For the purpose of calculating gain or loss in respect of 
property, all property is allocated to two classes : (a) that owned 
on January 1, 1919, or (b) that acquired on or after that date. 
In the case of property acquired before January 1, 1919, the 
taxpayer will use as a basis the fair market price or value as of 
January 1, 1919, whereas in respect of property acquired on or 
after that date, he will use as a basis the cost thereof or the 
inventory value, if the inventory is made upon the basis pre- 
scribed by the Comptroller. § 353. 

57. When property is exchanged for other property, how shall 
gain or loss be determined? 

If property, other than stock or securities exchanged in con- 
nection with a reorganization, merger or consolidation of a 
corporation, is received in exchange for other property, it shall, 
for the purpose of determining gain or loss, be treated as the 
equivalent of cash to the amount of its fair market value. 
§ 354. 

58. What about gain or loss on exchanges of stock or securi- 
ties in connection with a reorganization, merger or consolidation 
of a corporation? 

(a) In such a transaction, if the taxpayer receives new 
stock or securities of no greater aggregate par or face value, 
no gain or loss shall be deemed to occur from the exchange. 



Information Relating to Income Tax Law 289 

Comptroller [Vol. 20] 

§ 354. (b) If the taxpayer receives new stock or securities of 
an aggregate par or face value in excess of the aggregate par or 
face value of the stock or securities exchanged, the amount of 
the excess in par or face value shall be treated as a gain to the 
extent that the fair market value of the new stock or securities 
is greater than the cost of the stock or securities exchanged, if 
acquired on or after January 1, 1919, or its fair market price 
or value as of January 1, 1919, if acquired before that date. 
§ 355. 

59. May inventories be used? 

Yes; whenever in the opinion of the Comptroller they are 
necessary in order to clearly determine the taxpayer's income. 

It is conditioned that inventories shall be taken upon such 
bases as the Comptroller may prescribe, (a) conforming as 
nearly as may be to the best accounting practice in the trade or 
business, (b) most clearly reflecting income and (c) conforming 
as nearly as practicable to the forms and methods prescribed 
by the commissioner of internal revenue. § 356. 

Fiduciabies 

60. Does the State law resemble the Federal statute in its 
application to estates and trusts f 

Yes, very closely. If one keeps in mind the difference in 
geographical area affected by the two statutes and that the 
Federal act divides individual taxpayers into two classes, (1) 
citizens and alien residents, and (2) nonresidents aliens, while 
the State law allocates them to two classes in respect of residence 
within the State, — this is, (1) residents and (2) nonresidents — 
it will be found that the statutes are, otherwise, almost identical 
in wording. 

For a definition of " fiduciary," see answer 24. 

In relation to "gross," "net" and "taxable income," see 

answers 34 to 48. 

In relation to " returns," see answers 85, 86 and 87. 
State Deft. Kept.— Vol. 20 19 



290 State Department Reports 

[ Vol. 20] Comptroller 

Withholding Agents 

61. Who is a withholding agent? 

Any person, corporation, association or partnership, in what- 
ever capacity acting, who has the control, receipt, custody, dis- 
posal or payment of interest, rent, salaries, wages, premiums, 
annuities, compensations, remunerations, emoluments or other 
fixed or determinable annual or periodical gains, profits and 
income taxable under the law, is a witholding agent. § 350, 
subd. 10. 

62. Is a lessee or mortgagor of property, a fiduciary, an em- 
ployer, or a State or a municipal officer or employee, a withhold- 
ing agent? 

Yes, if he has the control, receipt, custody, disposal or pay- 
ment of items of fixed or determinable " taxable income " 
described in answer 61, of any resident or nonresident. § 350, 
subd. 10. 

63. What must a withholding agent retain? 

Although subdivision 1 of section 366 requires a withholding 
agent to deduct and withhold 2 per cent of personal service 
income if the amount thereof for any nonresident taxpayer in 
any taxable year equals or exceeds $1,000, it is obvious that that 
provision is in conflict with the general purpose and intent of 
the statute. It is not in harmony with section 351 which 
imposes the tax, nor with subdivision 3 of section 366, which 
indemnifies a withholding agent against the claims and demands 
of taxpayers on account of a tax deducted and withheld and 
requires the withholding agent to account for a " tax " deducted. 
The Comptroller will promulgate a rule requiring a withholding 
agent to deduct and withhold 1 per cent of the first $10,000 of 
all fixed and determinable annual or periodical personal service 
income of which he has the control, receipt, custody, disposal or 
payment, if the amount thereof in any taxable year equals or 
exceeds $1,000, and 2 per cent of all such income in excess of 
$10,000 in any taxable year, unless the recipient of the income 
files with him (the withholding agent) a certificate in the form 
to be prescribed by the Comptroller showing that he is a resident 
of the State, 



Information Kelating to Income Tax Law 291 



Comptroller [Vol. 20] 



64. What is meant by personal service income? 

It means all salaries, wages, commissions, gratuities, emolu- 
ments, perquisites and other fixed and determinable annual or 
periodical compensation, of 'whatever kind and in whatever form, 
paid or received for personal service. § 366, subd. 1. 

65. Should deducting and withholding be on the basis of the 
calendar year or the basis of the taxpayer's fiscal year? 

Deducting and withholding should be on the basis of the calen- 
dar year; otherwise great confusion will arise. 

66. Should a withholding agent deduct and withhold from pay- 
ments due after May 14, 1919, on account of payments made 
before thai date but since January 1, 1919 ? 

Yes. The Attorney-General has held, in a letter opinion dated 
May 29, 1919 (20 State Dept. Rep. 222), that the deducting and 
withholding provision is to be construed retroactively, and that 
if the witholding agent has the opportunity to deduct and with- 
hold according to the plan stated in answer 63, he should do that. 

67. What about payments made prior to May 14, 1919, if the 
employee has left the service of the employer, or if payments made 
or to be made since May 14, 1919, are insufficient to meet the 
withholding requirements? 

In such a case the liability of the withholding agent is limited 
to the amount, if any, which he has the opportunity to deduct 
and withhold. If the employee left his service and was fully 
paid prior to May 14th, no liability exists. If amounts due and 
payable are insufficient to meet the withholding requirement after 
May 14, 1919, the withholding agent will be liable to the full 
extent thereof but no more. Letter opinion of Attorney-General, 
May 29, 1919, 20 State 'Dept. Eep. 222. 

68. Should a withholding agent calculate as a portion of the 
amount paid or to be paid during 1919, the aggregate of payments 
made before May 14, 1919? 

Yes. 

69. Is deducting and withholding required in cases where the 
personal services are rendered entirely without the State by a 
nonresident? 



292 State Department Reports 

[VoL 20] Comptroller 

No. Letter opinion of Attorney-General, May 29, 1919, 20 
State Dept. Rep. 221. 

70. Where the income of a nonresident is for personal service 
rendered partly within and partly without the State, is all of it 
taxable in New York? 

No. That portion received for services without the State is 
not taxable against nonresidents, but payments for services per- 
formed within the State are taxable. Letter opinion of Attorney- 
General, May 29, 1919, 20 State Dept. Rep. 221. 

70-a. Is withholding required in cases where the personal ser- 
vices are rendered partly within and partly without the State by 
a nonresident? 

Yes. Rules and regulations to be established by the Comp- 
troller will provide for the abatement to the nonresident of such 
portion of the sum deducted and withheld as relates to the per- 
sonal service compensation earned without the State, or that the 
withholding agent may deduct in respect of the income earned 
within the State only and support his return to the Comptroller 
with an appropriate affidavit. 

70b. What must a withholding agent do with the per cent of 
income withheld f 

He must pay it to the Comptroller on or before the 15th day 
of March next following the close of the calendar year during 
which the payments were made or credited. § 366, subd. 3. 

70c. Is there any exception to the foregoing rule? 

Yes; if the taxpayer shall have paid the tax to the Comptroller, 
it shall not be again collected from the withholding agent. § 366, 
subd. 5. 

70d. What must a withholding agent do in respect of income, 
whether withheld or not? 

He shall return to the Comptroller complete information con- 
cerning the items of fixed and determinable annual or periodi- 
cal income of any taxpayers, except interest represented by cou- 
pons payable to bearer, if the amount of such income in any 
taxable year, under the receipt, custody or control of the with- 



Information Relating to Income Tax Law 293 



Comptroller [Vol. 20] 



holding agent, equals or exceeds $1,000, subject to the authority 
of the Comptroller to limit and regulate these requirements as 
he may determine. § 366, subd. 2. 

71. Is a withholding agent personally liable for a tax required 
to be withheld f 

Yes, to the extent that the 2 per cent required to be retained 
will pay the tax. § 366, subd. 3. 

72. Is a withholding agent relieved of liability to the recipient 
for the percentage of income withheld? 

Yes. § 366, subd. 3. 

Returns 

73. With whom is a return of income required to be filed? 
Taxpayers must file return of income with the State Comp- 
troller. § 371. 

74. When must they be filed? 

On March 15th or before, next following the close of a taxable 
year. §371. 

75. Cam the time for filing a return be extended? 

Yes; the Comptroller may grant a reasonable extension if, in 
his judgment, good cause exists. The extension of time may not 
be for a longer period than six months, except in the case of a 
taxpayer abroad, and, in both cases, interest at 6 per cent per 
annum will be charged on the tax. Rules and regulations to be 
adopted will answer this question more fully. § 371. 

76. Who must file returns? 

In general, returns must be filed by (a) resident taxpayers 
(§ 367), (b) nonresident taxpayers, (c) fiduciaries (§ 369), (d) 
withholding agents (§ 366, subds. 2, 3) and (e) partnerships 
(§ 368). 

77. When must a resident taxpayer file a return and what mud 
it show? 

Every resident taxpayer having a " net income " for a taxable 
year of $1,000 or over, if single or if married and not living with 
husband or wife, or of $2,000 or over if married and living with 
husband or wife, is required to make a return of income. 



294 State Department Keports 

[Vol. 20] Comptroller 

It must show a taxpayer's " gross income " and the deductions 
and the credits allowed by law, and such other data as may be 
called for on the return form to be prescribed by the Comptroller, 
in order that the true tax liability may be determined. § 367. 

78. If a husband and wife living together have an aggregate 
"net income " of $2,000 or more, must each fie a return? 

Each may file a return or they may join in rendering a single 
return. § 367. 

79. In such a case, if they make separate returns, how may the 
personal exemption be claimed? 

The personal exemption of $2,000 may be taken by either or 
prorated between them. § 362, subd. 1. 

80. // a taxpayer is unable to make a return, by whom shall U 
be rendered? 

In such a case it may be made by a duly authorized agent or 
by the guardian or other person charged with the care of the 
person or property of the disabled taxpayer. § 367. 

81. What should the return of a nonresident taxpayer show? 
It must show " gross income " from all sources within the 

State, and if the deductions authorized by section 360 are claimed, 
it must show " gross income " from sources both within and with- 
out the State. § 367. 

82. Are pa/rtnerships required to file returns? 

Yes; every partnership must make a return for each taxable 
year. § 368. 

83. What must the return of a partnership disclose? 

It must show (a) " gross income," (b) the deductions allowed 
by law, (c) the names and addresses of individual members 
entitled to distributive shares of " net income," and (d) the dis- 
tributive share of each. § 368. 

84. May individuals who are members of partnerships be 
required to make a return in relation to the business of the part- 
nership? 

Yes ; the Comptroller may require any such taxpayer to make 
a return stating the gross receipts and the net gains or profits of 
the partnership for any taxable year. § 364. 



Information Relating to Income Tax Law 295 

Comptroller [Vol. 20] 

85. Are fiduciaries required to file returns? 

Yes. Every fiduciary, except receivers appointed by authority 
of law in possession of part only of the property of a taxpayer, 
must make a return for the estate or trust or for the taxpayer for 
whom he acts (a) in case the taxpayer is a resident single person 
or if married and not living with husband or wife, if the " net 
income" is $1,000 or more, or in case the taxpayer is married 
and lives with husband or wife, if the " net income " is $2,000 
or more in a taxable year ; (b) in case the " net income " of the 
taxpayer, if an estate or trust, is $1,000 or over, or, (c) in case 
any beneficiary is a taxpayer other than a resident of the State. 
§ 365, subd. 2 ; § 369. 

86. What must the return of a fiduciary show? 

It shall disclose the items of (a) " gross income," (b) deduc- 
tions, (c) exemptions, (d) credits and (e) a statement of each 
beneficiary's distributive share whether distributed or not, and 
such other data as may be called for on the form to be prescribed 
by the Comptroller, in order that the income tax liability of the 
estate or trust or the distributive interests of the beneficiaries may 
be disclosed. 

87. Is a withholding agent required to make a return? 

Yes ; if required to deduct and withhold any tax, he shall make 
a return thereof and pay the tax to the Comptroller. If not 
required to deduct and withhold any tax, he must, nevertheless, 
make a return of information to the Comptroller of the taxable 
income paid by him to any taxpayer if the amount • of such 
income in any taxable year equals or exceeds $1,000. Exception 
is made in the case of income represented by interest coupon* 
payable to bearer. § 366, subds. 2, 3. 

08. Should a nonresident taxpayer make a return of income 
withheld by a withholding agent? 

Yes ; income upon which any tax is required to be withheld at 
the source should be included in the return of the recipient of 
the income, but the tax withheld shall be credited against the 
amount of tax computed on such return. § 366, subd. 4. 



296 State Department Reports 

[Vol. 20] Comptroller 

89. If a taxpayer changes from fiscal to calendar year or vice 
versa, are separate returns required for the partial year? 

Yes, as provided in section 370, but such a change in the basis 
of computing " net income " cannot after the first year be made 
without the consent of the Comptroller. 

90. Will blanks be furnished upon which to render returns? 
Yes ; but failure to receive a form does not relieve a taxpayer 

from the obligation of rendering a return. § 371. 

91. Will they resemble in form those prescribed by the United 
States Commissioner of Internal Revenue? 

Yes, so far as may be practicable. § 371. 

92. What may the Comptroller do if he believes a return is 
incorrect ? 

He may revise it and audit and state an account upon the 
return as revised and proceed to collect from the taxpayer addi- 
tional taxes, penalties and interest. § 373. 

93. What may the Comptroller do if no return is filed f 

He may examine or cause to have examined the books and 
records of any taxpayer and take testimony and proof material 
for his information. In addition, he may make an estimate of 
" taxable income " of such a taxpayer from any information in 
his possession and audit and state an account for the tax, penal- 
ties and interest due from the taxpayer. § 373. 

94. What relief has a taxpayer if he has erred against his own 
interests w making a return or if the Comptroller has erred in 
auditing and staling his account? 

He may, within one year, make application for revision. The 
Comptroller must grant a hearing on such an application and 
inform the taxpayer of his decision. If the taxpayer is not con- 
tent with the Comptroller's decision, he may review it by certi- 
orari, but before making the application for a writ the taxpayer 
must furnish an undertaking. §§ 374, 375. 

95. Witt the contents of reports amd returns be kept secret? 
Yes. A severe penalty is prescribed if the Comptroller or any 

officer, agent, clerk or employee divulges or makes known in any 



RULES AND REGULATIONS RELATING TO INCOME Tax 297 

Comptroller [Vol. 20] 

manner the amount of taxpayer's income or any of the particulars 
set forth in any report or return made, uidess directed by a 
proper judicial order or in such other manner as may be provided 
by law. § 384. 

96. Has the Comptroller power to determine what facts shall 
be reported? 

Yes; in addition to those named in the law, he may require 
such facts to be reported as may be necessary for the proper 
enforcement of the statute. § 371. 

97. Must returns be verified by affidavits or affirmations of the 
persons rendering them? 

Yes; to the effect that the statements contained therein are 
true. In the case of a fiduciary, the affidavit or affirmation shall 
be made to the effect that he has sufficient knowledge of the affairs 
of such individual, estate or trust to enable him to make the 
return, and that to the best of his knowledge and belief it is true 
and correct. §§ 369, 371. 



Rules and Regulations of the State Comptroller, in Rela- 
tion to Taxes Imposed Upon and With Respect to Incomes 
by Chapter 627 of the Laws of 1919 

(Dated June 11, 1919.) 

Travis, Comptroller. — The following regulations, articles 261 
and 269, relative to deducting and withholding at source, are pro- 
mulgated in advance of the formulation of a complete set of rules 
and regulations because of the immediate importance of the 
subject. 

Deducting and Withholding at Source 

Art. 261. Deducting and withholding tax at source. Under the 
opinion of the Attorney-General (Income Tax Letter No. 1, 
May 29, 1919, 20 State Dept. Rep. 222) deducting and with- 
holding is required of 1 per cent on the first $10,000 
and of 2 per cent on all sums in excess of $10,000 
from all salaries, wages, commissions, gratuities, emolu- 
ments, perquisites and other fixed and determinable annual or 



298 State Department Reports 



[Vol. 20] Comptroller 



periodical compensation earned for personal services in a business, 
trade, profession or occupation carried on within the State, if the 
aggregate amount thereof in any calendar year on account of any 
individual equals or exceeds $1,000, unless there shall be filed with 
the withholding agent a certificate of residence, on form 101, to 
the effect that the recipient is a resident of the State and setting 
forth his residence address within the State. 

Art. 262. Deducting and withholding in 1919. Withholding 
agents shall deduct and withhold, as set forth in article 261, in 
respect of personal service compensation paid or credited to the 
payee at any time on or after January 1, 1919, except that if the 
employee left the service of the withholding agent prior to May 14, 
1919 (the date of the enactment of chapter 627 of the Laws of 
1919), and was fully paid prior to that date, no duty or obliga- 
tion in respect to such payments rests on the withholding agent, 
unless the status of employer and employee is again created dur- 
ing 1919 and further payments of compensation for personal 
services are made or credited in 1919. In other words, the pro- 
visions for deducting and withholding are effective from January 
1, 1919, except as stated in this article. 

Art. 263. Fixed or determinable annual or periodical income. 
Only income earned for personal services is subject to deducting 
and withholding. The statute specifies that every withholding 
agent shall deduct from all salaries, wages, commissions, gratui- 
ties, emoluments and perquisites. But other kinds of personal 
service income may be included if fixed or determinable, annual 
or periodical. Income is fixed when it is to be paid in amounts 
definitely predetermined. It is determinable whenever there is 
a basis of calculation by which the amount to be paid may be 
ascertained. The income need not be paid annually or at an 
annual rate. It may be paid periodically. The word " periodical " 
is used in opposition to " annual " and means from time to time, 
whether or not at regular intervals. That the length of time 
during which the payments are to be made may be increased or 
diminished in accordance with someone's will or with the happen- 
ing of an event, does not make the payments any the less deter- 
minable or periodical. 



Rules and Regulations Relating to Income Tax 290 

Comptroller [Vol. 20] 

The following shall be deemed to be fixed and determinable 
annual or periodical compensation within the meaning of section 
360 of the Tax Law: 

Any payment made by way of salary, wage, commission, 
gratuity, emolument, perquisite or otherwise for personal services 
rendered, if the amount thereof shall be 

(a) determined prior to, concurrent with or subsequent to the 
rendering of the service, and is 

(b) based on personal services rendered by the hour, week, 
month, year or other period of time, 

whether such personal service consists of 

(c) the performance of specified or unspecified duties, or of 

(d) work done on or in connection with one or more of certain 
articles or parts thereof; 

irrespective of whether payment be made 

(e) in cash, 

(f ) in board or lodging, or both, 

(g) in the stock of a corporation, 

(h) by promissory note or other obligation, or 

(i) in property, service or otherwise. 

If payment shall be made otherwise than in cash, it shall be 
considered and treated as payment in cash to the fair market 
value (determinable usually by understanding or agreement 
existing between the payor and the payee) of such medium, other 
than cash, as may be employed. 

Fees for professional services are not subject to withholding 
unless contracted for or paid on an annual or periodical basis. 

Art. 264. Yewr, for purposes of deducting a/nd withholding. 
Deducting and withholding of personal service compensation by 
withholding agents shall be on the basis of a calendar year, irre- 
spective of the basis of reporting adopted by the payee-taxpayer. 
Personal service compensation shall be deemed to have been paid 
by the withholding agent and received by the payee-taxpayer only 
if and to the extent actually paid or credited to the payee and thus 
made reducible to possession by him. Commissions and all other 
forms of personal service compensation determined and paid o* 



800 State Department Reports 

[Vol. 20] Comptroller 

credited to a payee-taxpayer after the close of a calendar year, 
shall, for the purpose of deducting and withholding the tax and 
of returning information with respect thereto, be treated as pay- 
ments made in the calendar year when paid or credited, but for 
such purposes only. The approved method of accounting 
employed by the payee-taxpayer shall govern in so far as he may 
be called upon to account for such payments for income tax 
purposes. 

Art. 265. Income not subject to deducting and withholding. 
Deducting and withholding from income is not required in the 
following cases : 

(a) In respect of personal service compensation income when 
there shall have been filed with the withholding agent a resident's 
certificate on form 101, to the effect that the person receiving 
the compensation is a resident of this State and setting forth his 
residence address within the State. 

(b) If of a character other than compensation for personal 
services. 

(c) Where the personal services are rendered entirely without 
the State, by a nonresident, whether payment be made from within 
or without the State, irrespective of the status of the withholding 
agent The occasional entry into the State of a nonresident 
employee who performs the duties for which he is employed 
entirely without the State, but enters the State for the purpose of 
reporting, receiving instructions, accounting, etc., incidental to 
his duties without the State, shall not be deemed to take such 
employee out of the class of those rendering their services entirely 
without the State. 

(d) Where the personal services are rendered within the State, 
if rendered for, and delivery of payment is made without the State 
by, a nonresident individual or partnership having no office or 
place of business or paying agent within the State, or a foreign 
corporation that (1) is not registered in New York and (2) has 
no office or place of business or paying agent within the State. 
(Nothing in sub-paragraph " d " shall be construed to relieve the 
recipient from liability to make return and pay the tax on such 
income.) 



Rules and Regulations Relating to Income Tax 301 

Comptroller [Vol. 20] 

Art. 266. Income of a nonresident for services performed partly 
within <md partly without the State. In case a nonresident 
receives compensation for personal services rendered or performed 
partly within and partly without the State, the withholding agent 
shall deduct and withhold on the entire amount of compensation, 
as set forth in article 261, unless the withholding agent files with 
the Comptroller, with his return (form 103) of sums deducted 
and withheld, a certificate on form 102, setting forth 

(1) that the employee is a nonresident (stating his address); 
(If the withholding agent has not personal knowledge of the place 
of residence of the employee, he may state it upon information 
and belief, provided he submits with his certificate the affidavit of 
the employee stating such residence.) 

(2) that part only of the payments made were for services per- 
formed within the State, and 

(3) the amount in dollars and cents of such part. If brought 
into question, the burden of proof will be on the withholding agent 
to show that no greater portion than that set forth in his affidavit 
of the payments made was for services performed in this State. 

In apportioning such income of a nonresident, the following 
rules shall be observed by the withhloding agent : 

(a) If the nonresident is a salesman, drummer, agent or other 
employee through whose services receipts or remuneration inure 
directly to the employer, the deducting and withholding shall 
attach to the portion of the entire salary which the volume of 
business transacted by the employee within the State of New York 
bears to the total volume of business transacted within and with- 
out the State by such employee. 

(b) If the nature of the employment of the nonresident is such 
that receipts or remuneration for services rendered do not inure 
directly to the employer, as in the case of clerks, bookkeepers, 
laborers or other like classes of emloyees, the deducting and with- 
holding shall attach to the portion of the personal service com- 
pensation income of such employee which the time employed 
within the State bears to the time employed both within and with- 
out the State. 

(c) If it is not possible to apportion the income as above pro- 



302 Statb Department Reports 



[Vol. 20] Comptroller 



vided, because of the peculiarities of the service of the employee, 
the apportionment shall be made in accordance with the facts and 
the tax deducted and withheld accordingly. In such a case a full 
statement of the facts shall be made to the Comptroller. 

Art. 267. Form of residence certificate. Form 101 shall be 
used by residents of the State of New York for the purpose of 
claiming the benefit of such residence for income tax purposes. 
Withholding agents shall retain, preserve and keep available for 
examination and inspection by the Comptroller or his authorized 
representative all residence certificates for a period of one year 
next following the close of the calendar year for which such 
certificates shall have been given. Blanks (form 101) will be 
furnished by the Comptroller on the application of withholding 
agents. Withholding agents may, if they choose to do so, use 
blanks acquired from other sources, provided, however, that the 
form and wording thereof shall comply exactly with form 101. 

Art. 268. Revocation and renewal of residence certificates. An 
employee who has filed a certificate of residence on form 101, 
and who thereafter changes his residence, shall notify his employer 
of such change. Any employer who has reasonable ground for 
believing that an employee has changed his residence, after notice 
to the employee, may revoke the certificate of residence thereto- 
fore filed by such employee, and, in default of a new certificate 
of residence, shall deduct and withhold from the compensation 
of such employee for the entire calendar year, as provided in 
article 261. 

A certificate of residence shall be effective only for the calendar 
year in which it is filed. 

Art. 269. Deducting and withholding where residence is estab- 
lished. When a withholding agent shall have deducted and with- 
held from the personal service compensation of an employee and 
such employee shall thereafter, before return of the amount so 
withheld is made by the withholding agent but not later than 
March fifteenth in the year following, file with the withholding 
agent a residence certificate on form 101, the withholding agent 



Method of Financing Cost of Public Works 303 

Comptroller [Vol. 20] 

shall thereupon pay over to the employee the entire amount of 
income so deducted and withheld for such calendar year. 

Pursuant to the authority conferred hy chapter 627 of the Laws 
of 1919, the foregoing regulations (Articles 261-269, inclusive) 
in relation to " deducting and withholding at source," are hereby 
made and promulgated. 



Method of Financing Cost of Public Works — Matters Relating 
to Corporation Tax, Income Tax, Municipal Accounts, Land 
and Finance Bureaus — General Balance Sheet for the Year 
1919 

(Dated July, 1919) 

Travis, Comptroller. — The financial activities of New York 
State, in connection with the raising of the necessary revenue 
for its support, presents one of the most difficult functions of our 
government. During the last three decades, these maintenance 
charges have increased six-fold, although it is during this time 
that our industrial and commercial prestige have been of such 
paramount importance. We must, therefore, turn to these cir- 
cumstances, if we are to fully understand the reasons which have 
made certain additional expenditures imperative. 

Since 1880, New York has developed to the greatest Common- 
wealth, surpassing all others in population, wealth and natural 
advantages. Economical transportation furnished by our im- 
proved highways, canals and conserved natural resources have 
made possible the growth of numerous manufacturing centers. 
The result of this extraordinary development has been that over 
80 per cent of New York's population dwell in cities. This 
congestion has required the State to further safeguard their 
health and industrial efficiency, making the cost of Commission 
regulation far greater than all the administrative offices combined. 

Out of this novel situation, however, the State has been called 
upon to perform still greater functions. In fact, wherever the 
public interest could be best secured by the State's performance, 
this Commonwealth has never hesitated to enter the field. Thus, 
our governmental activities have been so enlarged of late that, 



804 Stats Department Reports 

[Vol. 20] Comptroller 

apparently, there is nothing the community demands which can- 
not be obtained by State methods at a constantly increasing cost 
to the taxpayer. How to equitably apportion this expense has 
been a problem for this administration to adjust. 

Of course, the shifting of wealth from the agricultural to the 
industrial classes has changed the State's system of taxing real 
estate and placed this burden upon the corporations and other 
forms of wealth. But this source of revenue has had little to 
do with the acquisition of the more permanent form of our public 
enterprises made possible during the last few years from the 
income realized from the sale of State bonds. 

Briefly described, the issuance of these securities is a scheme 
whereby New York State has been enabled to practically rebuild 
its magnificent highways, enlarge its natural and artificial water- 
ways and assure forever the preservation of upwards of 2,000,000 
acres of its forest preserve. Such a method of financing is 
justifiable, as these improvements will be inherited by coming 
generations, and it is only reasonable and fair that they should 
be asked to share the burdens. 

Until recent times, however, it had been the policy of the 
State to pay for such permanent acquisitions out of the annual 
receipts of the treasury. But the fallacy of including such 
expenditures soon became apparent, for not only should the cost 
of such permanent investments and improvements be paid for 
out of the receipts from bonds, but the length of the term of 
the bonds issued should bear some definite relation to the prob- 
able life of the improvement. 

This new method of financing was adopted for the new Barge 
canal, the act providing for the issuance of $101,000,000 eigh- 
teen year bonds. In order to lessen the yearly burden and extend 
the time of payment, the term was later extended to fifty years. 
This was also the scheme used in the two $50,000,000 highway 
bond issues in 1905 and 1912, and the recent $10,000,000 forest 
preserve bond issue. Other similar bond issues were $1,000,000 
for the Niagara Reservation; $950,000 for Adirondack Park; 
$2,500,000 for Palisades Interstate Park and $950,000 for the 
Saratoga Springs State Reservation. 



Method op Financing Cost of Public Works 305 

Comptroller [Vol. 20] 

Corporation Tax Bureau 

Over $8,000,000 more revenue will be added to the State 
treasury from the corporation net income tax amendment, Comp- 
troller Travis announces. This measure extends the scope of the 
present manufacturing and mercantile corporation statute, enacted 
in 1917, to include all business corporations, other than public 
service, insurance and moneyed corporations. It also increases 
the rate from 3 to 4% per cent. Last year manufacturing and 
mercantile companies contributed over $16,000,000 and before 
June 30, next, over $18,000,000 will be collected. 

Since the enactment of the first Corporation Tax Law in 1881, 
and up to two years ago, these business concerns were practically 
exempted from the payment of any but a nominal tax. Origin- 
ally, they were specifically relieved for the purpose of attracting 
their location in this State. While theoretically assessed on their 
personal holdings, they often escaped payment. After a lapse of 
thirty-seven years, the State now imposes an annual tax but 
exempts them locally, sharing one-third of the returns with the 
community. 

How inadequately they were assessed on their personalty is 
shown in an investigation made in 1915 which revealed a list 
of twenty-four companies having $90,000,000 of taxable person- 
alty, but actually assessed for only $3,300,000. This condition 
was due to the practice of filing certificates of incorporation in 
smaller communities although carrying on the business in the 
larger centers. 

Another amendment narrows the scope of exemption allowed 
on personalty. Formerly, mercantile and manufacturing cor- 
porations could not be assessed locally on account of machinery 
and equipment affixed to a building, if such fixtures did not pass 
from grantor to grantee. Now only those movable fixtures used 
for trade or manufacture and not essential for the support of a 
building, are exempted. Conforming to a recent decision, the 
new law provides that corporations may no longer deduct, in 
calculating net income, taxes paid or to be paid to the government, 

on either profits or net income. 

State Deft. Rept. — Vol. 20 20 



306 State Department Reports 

[Vol. 20] Comptroller 

Income Tax Bureau 

The first of a series of important rulings on the new State 
income tax of widespread interest to millions of taxpayers, was 
announced by Comptroller Travis, under whose direction this 
statute is to be administered. According to his statement, every 
employer, under the law, will be obliged to keep on file a certifi- 
cate of residence of each of his employees. In addition he will 
be required to deduct and withhold from the salaries of all non- 
residents equaling or exceeding $1,000 a tax of 1 per cent on 
the first $10,000 and 2 per cent in excess of that amount. 

This tax applies not only to salaries, but also to wages, com- 
missions, gratuities, emoluments, perquisites, or other fixed and 
determinable, annual or periodical compensation, earned for per- 
sonal service in a business, trade, profession or occupation car- 
ried on within this State providing that the withholding agent 
(employer) has not filed a certificate that his employee is a 
resident of this State, setting forth such residence. Blanks for 
this purpose have already been provided for and will be sent 
upon request. 

In addition the Comptroller has ruled that withholding agents 
shall deduct with respect of personal service compensation paid 
or credited to the payee at any time subsequent to January first, 
last, if payments are made or credited to the payee at any time 
within the calendar year. In other words, the act is retroactive 
in effect, in that, although it became a law on May fourteenth, its 
provisions date back to the beginning of the current year. 

Should the employee have left the service prior to the above 
date and had received full compensation up to the time of his 
departure no duty or obligation rests on the withholding agent. 
Despite the fact that the statute provides for a deduction of 2 per 
oent of all salaries of nonresidents employed within the State, 
the Comptroller believes that this amount was left in the statute 
through inadvertence when the bill which originally provided for 
a flat tax of 2 per cent was afterward changed on a graduated 
scale from 1 to 3 per cent. This ruling not only means a gain 
to the taxpayers but relieves the Comptroller's office of consider- 
able unnecessary work incident to returning amount in excess 
of 1 per cent. 



Method ov Financing Cost of Public Wobks 307 

Comptroller [Vol. 20] 

Additional rulings on the new State income tax were announced 
by State Comptroller Travis. One of the most complex features 
which so far has caused considerable comment, according to the 
Comptroller, has to do with "deducting and withholding at the 
source " by every employer. Under the rules only incomes earned 
for personal services are affected. This means " salaries, wages, 
commissions, gratuities, emoluments and perquisites although 
other kinds of personal service incomes may be added if fixed, 
determinable, annual or periodical/' 

" Income is fixed," reads the statement, " when it is to be paid 
in amounts definitely pre-determined," that is, whenever there 
is a basis of calculations by which the amount to be paid may be 
ascertained. This may not necessarily be paid annually but 
rather periodically, that is, " from time to time," whether or not 
at regular intervals. Should the length of time be increased or 
diminished, the payments are none the less determinable or peri- 
odical. To ascertain, however, whether a salary, wage, commis- 
sion or gratuity is " fixed or determinable, annual or periodical " 
(1) it must be determined prior to, concurrent with or subse- 
quent to the rendering of the service; (2) based on personal 
service rendered by the hour, week, month, year or other period; 
(8) on the performance of certain specified or unspecified duties; 
(4) on work done on or in connection with one or more of 
certain articles or parts, regardless whether the payments are 
made in cash, board or lodging, property, service or otherwise. 

Should the payments not be made in cash, the fair market value 
is to be the medium employed. Fees for professional services 
are not subject unless paid on an annual or periodical basis. The 
calendar year is the basis regardless of the methods adopted by 
the taxpayer. Commissions and other forms of personal service 
compensation determined and paid or credited to the taxpayer 
after the close of the taxable-calendar year are to be treated as pay- 
ments made in the calendar year when paid and credited. How- 
ever, income is not subject to be deducted when (1) withholding 
agents have obtained certificates of residence of employee, (2) if 
of a character other than compensation for personal services, or 
(3) when personal services are rendered entirely without the 



308 State Depabtment Repobts 

[Vol. 20] Comptroller 

State by a nonresident, whether payment be made within or with- 
out, irrespective of the status of the withholding agent 

The occasional entry into the State of a nonresident employee, 
working entirely without the State but returning to report, 
receive instructions, etc., incidental to his work, does not disturb 
his classification. Where the nonresident's income is for services 
partly performed within and without, the withholding agent 
deducts on the entire compensation unless he files with the Comp- 
troller an affidavit that (1) employee is a nonresident, (2) that 
part only of the payments were made for services performed 
within the State; (3) with the amount in dollars and cents of 
such part In apportioning the income of nonresident salesmen 
and other employees through whose services receipts or remunera- 
tion inure directly to the employer, only that portion of the entire 
salary which the volume of business he transacts within bears 
to the total carried on within and without, is attachable. 

Should the remuneration not inure directly, as in the case of 
clerks, bookkeepers, etc, the attachable portion of the income is 
based upon the relationship which the time employed within 
bears to the time both employed within and without. If the 
peculiarity of the services performed renders such apportionment 
impossible, a full statement of such fact must be filed with 
the Comptroller. Special forms of resident certificates are pro- 
vided, and the withholding agents are obliged to keep these avail- 
able for inspection at least one year afterward. Should the em- 
ployee change his residence, he must notify his employer, failure 
for which his certificate is revoked and a deduction made from his 
compensation for the entire year. If he afterwards files & resi- 
dent certificate before the annual return is made, in no event 
later than March fifteenth in the following year, the withholding 
agent is to return the entire amount deducted. 

Municipal Accounts Bubeatj 

Temporary loans or certificates of indebtedness and bonds last 
year cost 115 municipalities throughout the State the sum of 
$59,364,187.26, Comptroller Travis reported. This sum, which 
does not include the interest paid on bonds for public utilities 



Method of Financing Cost of Public Wobxs 809 

Comptroller [VoL 20] 

in cities of the second and third class aggregating a large 
amount in addition, was compiled by the municipal accounts 
bureau of the Comptroller's office. This department is in charge 
of the periodical investigations of the finances of over 1,500 cities, 
counties, towns and villages. According to the statistics on file 
in the Comptroller's office, it has been learned for the first time 
that of the aggregate amount indicated above, first-class cities, 
such as New York, Rochester and Buffalo, which are so classified 
under a constitutional provision, each having a population exceed- 
ing 175,000, paid out $54,690,873 during the same period. This 
latter amount included interest on loans and bonds for public 
utilities, and was divided as follows: New York city, $52,140,- 
143; Buffalo, $1,673,404; Rochester, $877,326. 

Outside of cities of the first class, the sum of $4,663',814.26 was 
expended by the cities of the second and third classes for the 
same purposes. For payment of interest on temporary loans or 
certificates of indebtedness for the various counties of the State, 
excepting those comprising Greater New York, and second and 
third class cities the sum of $406,604.63 was expended. This 
was divided as follows: counties, $137,393.11; second class cities, 
$184,334.76; third class cities, $84,876.76. For the payment 
of interest on bonds excluding those for public utilities, the sum 
of $4,266,709.63 was required. Counties, excepting those com- 
prising Greater New York, expended $1,284,381.54; second class 
cities, $1,632,526.32, and third class cities, $1,149,801.77. 

Land Bxjbeau 

Prior to 1883 there was no settled plan relative to the pres- 
ervation of the wild or forest lands belonging to the State. 
Apparently the only policy was to dispose of such lands at the 
earliest opportunity for the purpose of reimbursing the State 
for the amount invested therein and restoring them to the assess- 
ment rolls of the towns in which located. 

The first legislative step toward the preservation of the forest 
was the enactment of chapter 13, Laws of 1883, which prohibited 
the sale of State lands in the counties of Clinton, Essex, Franklin, 
Fulton, Hamilton, Herkimer, Lewis, Saratoga, St. Lawrence and 



310 State Department Repobts 



[Vol. 20] Comptroller 



Warren. This was followed by the enactment of chapter 283, 
Laws of 1885, establishing a forest commission and creating the 
forest preserve which was defined in section 7 of said act as 
being "All the lands now owned or which may hereafter be 
acquired by the State of New York within the counties of Clinton, 
excepting the towns of Altona and Dannemora, Essex, Franklin, 
Fulton, Hamilton, Lewis, Saratoga, St. Lawrence, Warren, Wash- 
ington, Greene, Ulster and Sullivan. By subsequent enactment, 
the counties of Delaware and Oneida were added to the forest 
preserve counties. 

At the time of the creation of the "Forest Preserve" the 
State lands in these counties aggregated about 850,000 acres, 
title to the greater part of which was derived through sales held 
by the Comptroller for unpaid taxes. 

Through subsequent tax sales, and through purchases made by 
the Forest Preserve Board and its successors, this acreage has 
increased so that the "Forest Preserve" now comprises over 
1,600,000 acres. 

Finance Bureau 

A consolidated statement of receipts, expenditures and cash 
balances applicable for the general purposes of State government 
showing in comparative form the results of the past two years 
follows : 

Fiscal year ended 
t — * — ■% 

June 30, 1019 June 30, 1918 

Receipts: 

Taxes collected $73,128,101 35 $68,942,580 78 

Other revenues and re- 
ceipts 6,705,532 50 6,842,498 40 

Temporary loans 625,000 00 



Total receipts $80,458,633 85 $75,785,079 18 

Opening cash balance 

July 1 9,890 ? 616 48 7,248,108 32 



$90,349,250 33 $83,033,187 50 



Method of Financing Cost of Public Woeks 311 

Comptroller [Vol. 20] 

Fiscal year ended 

Expenditures : June 30, 1919 June 80. 1918 

Ordinary expenditures, 
etc $64,861,667 90 $59,339,111 86 

Debt service contributions, 

etc 13,330,145 11 13,168,459 16 

Canal construction appro- 
priations 149,500 00 6S , 5,000 00 

Redemption of temporary 
loans 600.000 00 

Total expenditures... $78,941,313 01 $73,142,571 02 
Closing cash balance June 
30 11,407,937 32 9,890,616 48 

$90,349,250 33 $83,033,187 50 

Excess receipts over expendi- 
tures (exclusive of loans) . $1,492,320 84 $2,642,508 16 

The general condition of the various State funds in the treasury 
as of June 30, 1919, is shown on the general balance sheet on 
pages 311-313, with supporting statements following. 

Genekal Balance Sheet of the State of New York 

as of June 30, 1919 

Resources 
• General Fund: 
Revenue required for appropriations in 

force $94, 657, 112 19 

Cash (statement I) 10, 141, 468 09 

$104, 798, 680 28 

Canal Fund: 
Construction accounts: 

f Construction $147, 203, 305 83 

Investments (J. R. Shanley Est. Co.) . 469, 600 00 

Cash (statement I) 4, 106, 400 00 

* For General Purposes of Government. 

t Construction Accounts represent only the capital expenditures from tfee pr oceeds of ponqs 
and appropriations 10 at this data. 



312 State Department Reports 

[Vol. 20] Comptroller 

Canal Debt Sinking Fund: 

Investments at par $39, 640, 016 68 

Cash (statement I) 867, 626 38 

Cash for ( statement I ) : 

• Appropriations in force 1, 193, 399 33 

• Surplus 73, 069 90 

$193, 613, 418 02 

Highway Improvement Fund: 
Construction accounts: 

f Construction $74, 482, 916 02 

Cash (statement I) 5, 796, 791 06 

Highway Debt Sinking Fund: 

Investments at par 16,717,309 43 

Cash (statement I) 4, 010, 926 32 

101, 007, 942 83 

Saratoga Springs State Reservation Fund: 

f Purchase of land, etc $618, 991 59 

Cash (statement I) 8 41 

619, 000 00 

Palisades Interstate Park Fund: 

f Extensions and improvement s $4, 499, 610 77 

Cash (statement I) 500, 389 23 

Sinking Fund: 

Investments at par 375, 580 00 

Cash (statement I) 346, 345 47 

5, 721, 925 47 

State Forest Preserve Fund: 

f Land, etc $522, 788 95 

Cash (statement I) 1, 977, 211 05 

Sinking Fund: 

Investments at par . 83, 100 00 

Cash (statement I) 248, 231 68 

2, 831, 331 68 

Trust Funds: 

Principal investments at par $8, 770, 860 37 

Principal cash (statement I) 1, 510, 519 13 

Revenue cash (statement I) 2, 925 35 

10, 284, 304 85 

Total resources $418, 876, 503 13 

• For General Purposes of Government, 
t Construction accounts represent only the capital expenditures from the p r oceeds of 

sad appropriations as at this date. 



Method of Financing Cost of Public Works 313 

l • 

Comptroller [Vol. 20] 



Appropriations, LiabiUHe* and Burplu$ 
* General Fund: 
Appropriations in force (statement IV) $94,657,112 19 
Comptroller's temporary certificates... 25,000 00 

Surplus June 30, 1919 (statement III) . 10, 116,468 09 

$104, 798, 580 28 

Canal Fund: 

Funded debt $148, 000, 660 00 

Comptroller's temporary certificates... 600,000 00 

Construction appropriations 784, 500 00 

Miscellaneous receipts on account of con- 
struction appropriated 1, 922, 695 94 

Miscellaneous receipts on account of con- 
struction unappropriated 531, 449 39 

Canal Debt Sinking Fund 40, 507, 642 96 

•Appropriations in force (maintenance, 

etc.) 1, 193, 399 33 

•Surplus, June 30, 1919 (statement I). 73,069 90 , 



Highway Improvement Fund: 

Funded debt $80, 000, 000 00 

Highway Debt Sinking Fund 20, 728, 235 75 

Miscellaneous receipts on account of con- 
struction unappropriated 261, 359 79 

Miscellaneous receipts on account of con- 
struction appropriated 18, 347 29 



193, 613, 418 02 



101, 007, 942 83 

Saratoga Springs State Reservation Fund: 
Funded debt 619, 000 00 

Palisades Interstate Park Fund: 

Funded debt $5, 000, 000 00 

Palisades Interstate Park Sinking Fund 721, 925 47 



State Forest Preserve Fund: 

Funded debt $2, 500, 000 00 

State Forest Preserve Debt Sinking Fund 331,331 68 



5, 721, 925 47 



2,831,331 68 
Trust funds 10,284,304 85 



Total appropriations, liabilities and surplus $418, 876, 503 13 



•For Ctattal Pitfp o m of Qorenunwit. 



314: State Department Bepobti 

[Vol. 20] Comptroller 

Statement of State Debt and Sinking Funds as or 
. June 30, 1919, and June 30, 1918 

Increased 
or 
Funded debt: June 30. 1010 June 30. 1018 D e c r e as e (— ) 

Canalbonde $148,000,000 00 $148,000.000 00 

Highway bonds 80.000.000 00 80,000.000 00 

Palisades Interstate Park bonds „ 6,000,000 00 5,000,000 00 

State Forest Preserve bonds 3.600.030 00 3,600,000 00 

Saratoga Springs State Reservation bonds 019,000 00 714,000 00 — 96,000 00 



Total Ponded Debt $330,110.600 00 $330,314,600 00 — $06,000 00 



Temporary debt: 

For suppression of European Corn Borer $36,000 00 + $36.000 00 

For Canal Terminals 600,000 00 + 000.000 00 



Total Temporary Debt $636.000 00 + $636.000 00 



Total State Debt $236,744.600 00 $336,314.660 00 + $630,000 00 



Leai Sinking Fund Resources: 

(For accruing interest and redemptions) 

Canal Debt Sinking Fund $40,607.643 06 $36,518.840 38 +$3,988.703 68 

Highway Debt Sinking Fund 30,728,336 75 18,345.666 19 +3.482,680 50 

Palisades Interstate Park Debt Sinking Fund 731,925 47 608,783 03 + 113,143 45 

State Forest Preserve Debt Sinking Fund 331.33108 241,100 66 + 90,225 02 



Total Snaking Fund Resources $62,280.135 86 $65,614,293 26 +$6,674.842 61 



Net State Debt $174,455,524 14 $180,600,306 75 —$6,144.843 61 



Statement of General Fund Operations for the Fiscal 
Years Ended June 30, 1919, and June 30, 1918 

Fiscal years ended Increase (+) 

, » ■ '■> or 

Bmrae Reeeipte: June 30. 1919 June 30. 1918 Decease (-) 

General property taxes $15,067,918 66 $13,303.046 19 +$1,864,872 36 

Special taxes 

Excise (liquor tax) 5,487,469 36 11,045,353 66 —8,657,883 30 

Corporations 37,101,387 04 23,078.638 83 +5,033,748 22 

Organiiation of corporations 816.52180 819,366 17 — 3,843 37 

Transfers (inheritance tax) 13.339.583 90 11,433,400 00 +1,906,183 9) 

Stock transfers (stamp tax) 6.989,317 08 5,313,033 00 +1,677,284 48 

Investment tax 852,847 30 1,899,38131 — 646.633 95 

Mortgages 919,658 70 939.866 11 — 30.307 32 

Motor vehicles 2,509,600 74 2,677,58166 — 167,92191 

Racing associations 2,048 23 2,033 00 + 16 23 

Non-resident taxes, redemptions, etc 41,740 52 31.934 38 + 9,806 14 

Other revenues and receipt* 6,627,474 70 6,831,466 14 — 193,99135 

Total Revenue Receipts $79,755,576 14 $75,764,046 03 +$3,001.629 22 



s 



Method of Financing Cost of Public Woeks 315 



Comptroller [Vol. 20] 



Fsjonl y«m ended Increase (+) 



June 30, 1910 
(classified by general functions of govern- 
it): 

&*nton $115,606 90 

Administrative 1,081,179 SO 

k*M»ture 1,641,790 43 

Judici »l 2,639,761 36 

K**olatrw 4,729,404 86 

Educational 1 1 , 028 , 104 08 

Agricultural 3,603,779 01 

tensive 4,048,137 81 

Peo »J 1,631,296 a 

to****** 11,639.176 70 

Charitable 4,690,660 31 

Protective 3,806.990 06 

Constructive 9,477,623 34 

G««l 1,764,937 18 

Contribution! payable to Canal Fund for appropriationt . 3 ,376 , 309 68 



June 30, 1918 


1 


Deertme (— ) 


8104,988 16 


+ 


$10,675 76 


1.866,606 45 


+ 


165.670 06 


1,731,431 87 


— 


79.625 48 


3,841,713 74 


— 


211,952 49 


8,991,964 81 


+ 


737,450 01 


10,090,087 91 


+ 


932,066 13 


3,114,368 78 


+ 


478,510 27 


6,103.044 39 




1,064.906 M 


3,836,663 49 


.+ 


304,731 73 


11,404,009 67 


+ 


136,166 08 


4,896,119 33 


+ 


394,686 99 


3,780,414 68 


+ 


26,575 37 


6,913,860 11 


+ 3,564,763 IS 


1,023.174 73 


+ 


731,762 40 


8,314,387 43 


— 


938,017 80 



Total Ordinary Eipenditura.ete $65,093,714 40 880,996.309 30 +84,097,406 10 



Btate Debt Service: 

Saratoga Springe State Reservation: 

Redemption of debt $06.000 00 $06,000 00 

Interest on debt 28,560 00 83,300 00 — $8,800 00 

Contributioni to Snking Fundi: 

Canal Debt Staking Fund 7,988,283 04 7,714,887 33 + 273,945 82 

Highway Debt Sinking Fund 4,819,639 17 4,924,843 66— 105,203 38 

Palisades Interstate Park Debt Sinking Fund... 277,586 57 376,531 18 + 1,055 39 

State Forest Preserve Debt finking Fund 121,076 38 136,388 31 — 4,31188 



Total State Debt Service 813,330,145 11 813.168,469 16 + $161,685 96 



Total General Fund Expenditures $78,423,859 57 $74,164,768 46 +$4,259,09111 



Revenue Reoeipta over Expenditures $1,331,716 57 $1,599.278 46 — $267,56189 



General Fund Surplus: 

Balance beginning of yew $8,506,537 80 $0,835,722 30 +$1,740,805 00 

Credits: Exoess revenue receipts over expenditures 

above 1,331.716 67 1,609,278 40 — 367,50180 

Temporary loans for employees in military 

600,000 00 + 600,00000 



Temporary loan for suppression of European 

CornBcrer 36,000 00 + 36,000 00 

Transfer from Canal Fund surplus 318,334 10 143,687 03 + 75,037 14 



810,741,468 09 $8,667,687 78 +$2,173,880 81 

Charges: Repayment temporary loans 600,000 00 + 600,000 00 

Refund to Common 8chool Fund 1,060 43 — 1,060 42 

Unpaid temporary loan 36,000 00 + 36,000 00 



Balance end of yew per Balance Sheet 810,116,468 09 $8,566,527 36 +$1,649,040 73 



•Warrant registered 



316 State Department Reports 



[Vol. 20] Comptroller 



Matter Relating to the Income Tax Law, Article 16 of the Tax 
Law, Added by Chapter 627 of the Laws of 1919 

(Dated August, 1919) 

Travis, Comptroller. — The enactment of the new Income Tax 
Law in New York marks a novel departure in the development of 
the State's finances. This latest source of revenue, adopted in 
Massachusetts and Wisconsin, has been resorted to in order to 
meet the loss of excise revenue and the rapidly increasing expend- 
itures of State and city governments. Its adoption here will 
afford a medium of reaching those taxpayers who can best con- 
tribute to the growing public burdens which have increased over 
3*00 per cent in the last two decades. 

Briefly outlined, the new measure imposes a direct tax upon 
the annual incomes of every individual, whether received from 
labor, industry, investments, real estate or any other source. Only 
those incomes of less than $1,000 for single persons and $2,000 
for married persons with $200 additional for each dependent, are 
exempted from the tax, smaller incomes being free as the f ramers 
believe that incomes required for the maintenance of a standard 
of living should not be taxed, but that all sums in excess of the 
amounts mentioned should be levied upon. 

In other words, single persons are exempted on their incomes 
up to $1,000, and married persons up to $2,000. Individuals 
in the employ of the United States government, including soldiers 
and sailors, are not taxed upon income received in such employ- 
ment, although the salaries of State and municipal officials 
exempted from the payment of the Federal tax will be taxable 
under the new State law. Residents of another State are taxed 
in respect of incomes earned in this State, but if the laws of 
their States impose a tax on such incomes, a credit in the amount 
of the tax so imposed is allowed if reciprocal credits are given 
to residents of New York State receiving income there. 

In substance, individuals are taxed and the provisions of law 
relating to them are applied accordingly as they come within 



Income Tax Law, Article 16 of Tax Law 317 

I — 

Comptroller [Vol. 20] 

either of two classes, (a) residents and (b) nonresidents. Exclu- 
sive of certain deductions and exemptions, the taxable income 
of the first class includes that which arises from every source 
within or without the State. With reference to nonresidents, 
income includes only that derived within the State. One material 
point of difference in the case of nonresidents is that they are not 
allowed the personal exemption of $1,000 if unmarried or $2,000 
if married, with an additional $200 for each dependent, which is 
granted to residents. 

At the outset it should be noted that the State statute resem- 
bles in essential respects the Federal act. That will make it 
easier for taxpayers to understand and interpret In so far as it 
affects a great body of income taxpayers, gross income and net 
income mean the same in both cases. The deductions and exemp- 
tions are in substantial accord. Generally speaking, with refer- 
ence to residents, gross income will have different meanings under 
the two acts only when the taxpayer derives some part or all of 
his income from bonds of other States, or municipal subdivisions 
thereof, or from employment by the Federal government, the 
government of the State of New York, or some political division 
of the latter, and in case of officers of religious, charitable and 
eleemosynary institutions if the income is used exclusively for 
those purposes. While deductions under the two acts in the main 
parallel each other, they are in substantial agreement except in so 
far as apportionments are concerned and in that respect it must 
be kept in mind that the State tax is local and that a change in 
geographical area necessarily causes changes in the content, but 
not the general plan of the law. 

The State act imposes a graduated income tax with no surtax. 
On the first $10,000 of taxable income, the rate is 1 per cent; on 
the next $40,000, 2 per cent ; and above $50,000, 3 per cent. It 
is imposed on income received during the calendar year of 1919. 
Taxpayers are required to file returns with the Comptroller not 
"later than March 15, 1920, and to accompany the return with 
a remittance of the amount of the tax. If the individual or the 
partnership in which he is a member has established a fiscal year 
other than the calendar year, the return may be for the fiscal 



318 State Department Reports 

[Vol. 20] Comptroller 

period. In that case, only the income earned between January 1, 
1919, atid the date of the close of the fiscal year will be taxed in 
the first instance. Thereafter the returns will be for complete 
fiscal years of twelve months each, except that fiscal periods may 
be changed with the consent of the Comptroller. 

Individuals carrying on business in partnerships are liable for 
the tax in their individual capacity as is the case under the 
Federal act, but the partnership is required to file a return. The 
act is also applicable to the incomes of estates and all kinds of 
property held in trust, and in each case the fiduciary is made 
responsible for making the return of income for the estate or trust 
for which he acts. 

Because they are unlike provisions of the Federal act, those 
relating to withholding agents are of great importance. It pur- 
ports to impose the tax on the entire net income of non-residents 
"from all property owned and from every business, trade, pro- 
fession or occupation carried on within the State by natural per- 
sons not residents thereof. " The term withholding agent is 
defined. Persons standing in that relation to non-residents 
are required to deduct and withhold 2 per centum of all personal 
service compensation of whatever kind and in whatever form paid 
or received, if the amount thereof for a year equals or exceeds 
$1,000, and as to all other income of non-residents, the withhold- 
ing agent is required to return to the Comptroller complete infor- 
mation if the amount thereof in a single year equals or exceeds 
$1,000. 

The duty of administering the law is imposed upon the State 
Comptroller. He is authorized to make such rules and regulations 
and to require such facts and information to be reported as he 
may deem necessary to enforce the payment of the tax. The 
magnitude of the task required of the Comptroller's office has 
necessitated the establishment of a new bureau to handle the work. 

The first concern of the Comptroller has been to select an 
executive head for the organization and to prepare an outline of 
a tentative organization. The rules, regulations and the neces- 
sary blanks for returns and other purposes are being prepared as 
soon as may be and in their preparation the Comptroller is receiv- 



Income Tax Law, Article 16 of Tax Law 319 

Comptroller [Vol. 20] 

ing helpful suggestions from the various groups of individuals 
affected. 

It is expected that the act will yield from $40,000,000 to 
$45,000,000 annually. That amount is not to be devoted exclu- 
sively to State purposes. The act provides for an equal dis- 
tribution between the State and the counties, cities and towns of 
the State. In this respect, the new law is not a State income tax 
measure in the sense that the revenue is applied entirely for State 
purposes. The amount remitted to municipal corporations is 
to be apportioned according to the assessed valuation of real 
property. It will not necessarily bear any relation to the amount 
of income tax collected in a given municipality. 

In the beginning mention was made of the need of a more per- 
manent form of revenue to meet the needs of the State and its 
expenditures. In considering this new measure as it affects those 
requirements, it should be pointed out that it is impossible now 
to state with absolute precision just what the revenues and ex- 
penditures for the State will be for the future. Taking a most 
conservative estimate based upon the revenue receipts for the 
fiscal years ending June 30th, it is fairly possible to estimate the 
revenue under existing laws. The receipts of the fiscal year just 
closed exceeded $80,000,000 and for the fiscal year ending June 
30, 1920, taking into account the new revenue law now pending, 
it is expected the total will reach $98,600,000. 

This means that $45,000,000 will probably be received by the 
State from new laws, and if the available estimated cash balance 
is added, the estimated available resources to meet budget appro- 
priations for 1919 will aggregate $101,500,042. Of the total 
increase anticipated from new laws, $13,272,069 will come from 
direct taxes; $20,000,000 (one-half) from the new income tax; 
$8,000,000 from the amendments to the business corporation 
tax; $2,500,000 from transfer tax and $1,500,000 from the motor 
vehicle amendment. 

Notwithstanding beliefs to the contrary, there is practiced at 
Albany in each succeeding year, more and more, the spirit of 
economy and efficiency. That annually appropriations mount 



320 State Dbpabtment Reports 

— - 

[Vol. 20] Comptroller 

higher and higher, thereby giving an experience of extravagance, 
is due to the fact that for every dollar saved through the practice 
of economy several are expended by taking on new functions and 
activities. This is equally true of cities. Not until the people 
realize that to expand functions increases the cost of government 
will it be possible to stabilize State expenses, much less to reduce 
them. 

A word further in explanation of some of the technical terms, 
phrases and provisions of the new statute. The law applies not 
only to individuals but in relation to their income from copartner- 
ships and associations. In determining what is a taxable income, 
gains, profits and income from salaries, wages of whatever kind or 
form, from professions, vocations, paid businesses, commerce, sales 
or dealings in property are included, as well as income from inter- 
est, rent, dividends, securities or the transaction of any business 
carried on for gain, and income derived from any source. 

There are, however, certain deductions allowed such as life 
insurance policies, gifts acquired by bequest, Federal, State and 
municipal securities, industrial insurance, compensation of Fed- 
eral employees, income from religious, eleemosynary and char- 
itable institutions used exclusively for such purposes. Other de- 
ductions allowed in computing the net income include all ordi- 
nary expenses for carrying on a trade, losses sustained without 
insurable compensation, worthless debts, depletion and deprecia- 
tion of property. 

The law expressly provides, however, that the above deductions 
are not to be allowed in respect to ordinary living expenses, 
improvements and betterments, life insurance premiums (when 
the taxpayer is the beneficiary) and gifts to charitable, hospital 
and eleemosynary institutions. Other administrative features of 
special interest include one provision requiring that the utmost 
secrecy be maintained by the State Comptroller's office. The act 
provides a heavy penalty for divulging or disclosing any informa- 
tion, but permits, however, the publication of statistics so classi- 
fied as to prevent identification of any particular report 

Neglect or refusal to make any return renders the taxpayer 
liable to a fine of $1,000 or a year's imprisonment, or both. 





Income Tax Law, Article 16 of Tax Law 321 


Comptroller [Vol. 20J 



Should he decide thereafter to make a correct return, a 5 per cent 
penalty, in no case less than $2 shall be added False and 
fraudulent returns with intent to evade render the taxpayer 
liable to double the ordinary rate of taxation. 

At least three different forms of returns are required which 
provide for (a) individual taxpayers, (b) partnerships and (c) 
fiduciary returns. All of these are to be made at the same time. 
It is provided, however, that should the taxpayer, upon the 
approval of the Comptroller, change the basis from the fiscal year 
to the calendar year, a separate return must be made for the 
period between the close of the last fiscal year and the following 
December thirty-first. In the event of a change in fiscal year, 
with the consent of the State Comptroller, a similar return cov- 
ering the lapsed period must be made. 

One of the provisions that should be emphasized in the New 
York Income Tax Law is that this measure is a substitute in part 
for the tax heretofore attempted to be levied upon intangible per- 
sonal property. Accordingly, certain personal property is ex- 
empted from assessment, such as money on hand, on deposit, or 
at interest, bonds, notes ; choses in actions and shares of stock in 
corporations other than banks, owned by an individual or consti- 
tuting a part of a trust or estate after July 31, 1919. 

A final feature of the law is that the returns and the tax must 
be made and paid on or before March fifteenth, and failure to 
comply at that time makes the person liable to heavy penalties. 
Again, the return is to be made to the State Comptroller's office, 
or the branch offices, if any be established. 

A concluding word as to other important features. The law 
extends special exemptions to residents of this State but this 
does not preclude transients from becoming residents at any time 
before March fifteenth next although should he continue to receive 
income for services performed here, but not actually reside in 
New York, he would still be deemed a nonresident. 

The law also carefully defines "net income " as gross income 

less the deductions allowed. In explaining "gross income" as 

" the total of every item derived from all sources whatever (except 

those specified as wholly exempt) received during the taxable 

year," it includes all salaries received for personal service, profits 
Statb Dipt. Kept.— Vol. 20 21 



322 Stats Dxpabtmjctt Bepokts 

> ■ ■■■ 

[Vol. 20] Comptroller 

i 

i 

from business, rents, interest of every character, including bank 
deposits, and all income received from estates, partnership profits 
whether distributed or not. All items of foreign income and 
dividends on stock or from net earnings of foreign corporations 
are likewise added 

The term "gross income" has quite a different meaning as to 
nonresidents, for it includes only "gross income" from sources 
within the Stata It does not include annuities, interest on bank 
deposits, bonds, notes or other interest bearing obligations, and 
dividends from corporations except to the extent which such 
incomes shall be a part of a business, trade, profession, occupa- 
tion, carried on within this State and subject to taxation under 
this law. 

The term li taxable income " while not used in the law may be 
defined here to mean that portion of "net income" which forms 
the base upon which the tax is calculated. In order to determine 
what is " taxable income " a person's entire income is not neces- 
sarily taxed as the law provides that it shall not include income of 
certain character like interest on Liberty bonds, bonds of the 
State of New York, gifts, etc., in computing gross income. Fur- 
ther, certain deductions like ordinary business expenses and 
losses; bad debts charged off, depreciation, etc., may be subtracted 
from "gross income" in order to arrive at "net income." Again, 
personal exemption is allowed to residents as a deduction from 
" n$t income " in calculating " taxable income," and are allowed 
to nonresidents under certain conditions, like income taxes paid 
to the State and county of his residence. 

As pointed out before, the State Income Tax Law, in respect of 
individuals, resembles the Federal law and many of the provisions 
are identical. While the form of return required to be filed 
annually with the State Comptroller has not been decided upon 
it will probably be made to approximate very closely that used by 
the Federal government. This condition is highly desirable both 
for the convenience of the taxpayer and to facilitate the handling 
of the work in the office. Both returns will be made for the same 
fiscal period beginning with the calendar year 1919, but no State 
tax will be imposed upon incomes of last year, like the Federal 
law. 



Income Tax Law, Abticlb 16 of Tax Law 323 



Comptroller [Vol. 20] 



Administration 

Upon the Comptroller is imposed the duty of administering the 
income tax law and of collecting the tax- That is a task of 
measurable proportions. It is probable that one-half million 
people will be taxed under the new tax law. To furnish that 
number of reports, procure them to be made in proper form, col- 
lect that number of items of tax and intelligently pass upon each 
return, involves a tremendous amount of effort as well as of detail 
work. 

Recently, the office determined the form of organization and 
approximated the number of people to be employed in the work. 
The first consideration was to select an executive head for the 
organization, with such assistants as he may need for organization 
purposes. The Comptroller chose for the head of the bureau a 
man with proven executive ability, an understanding of the 
machinery of State government, special knowledge of taxation 
and technical, legal and accounting ability. 

Steps have already been taken to disseminate correct informa- 
tion concerning the law. Nothing has been permitted to delay 
that work because taxpayers should be advised of what is to be 
expected of them and of their liability to pay taxes. In this 
relation, it must be remembered that income accrued since Janu- 
ary 1, 1919, is subject to the tax. To expedite this, regularly 
employed workers have assumed the task before the new bureau 
was created. 

The Comptroller has already received the co-operation of bank- 
ing institutions, monied corporations and newspapers in his efforts 
to diffuse information about the law. Concurrently with the 
campaign of education will be pursued the work of formulating 
rules and regulations and the preparation of suitable blanks and 
reports as the law requires. A series of practical questions and 
answers called an " Income Tax Primer " has been prepared and 
is available for distribution. 

As the work progresses, it will be possible to map out more 
completely the form of office organization and to determine to 
what extent, if any, it may be jioco^rry to establish suboffices 
and agencies in various sections of the State. 



STATE CONSERVATION COMMISSION 



In the Matter of the Improvement of the Bulok River 

Watershed 

(Dated May 27, 1910) 

By the Commission. — Improvements in the Black River 
watershed of far-reaching importance, not only from a water 
power standpoint, but also from the standpoint of sanitation and 
general public welfare, is assured by the announcement just made 
by the Commission, composed of Conservation Commissioner 
Pratt, Attorney-General Newton and State Engineer Williams, 
that it has formally ordered the creation of the Black river regu- 
lating district. This means that now a series of storage reser- 
voirs may be constructed in the headwaters of the Black river 
and its tributaries which will maintain the flow of the water in 
that stream during the dry months at such a level as to guarantee 
power to the mills. It means more industry and better condi- 
tions for existing plants and power stations; it means that there 
will be less refuse lying on the river banks caused by the receding 
flood waters to cause a nuisance during the hot months when the 
water is low; and it will mean better and purer water, and a 
general building up of the entire district. 

The announcement comes as the result of a petition recently 
submitted to the Commission by the city of Watertown, and others, 
upon which a hearing was held in the office of the Conservation 
Commission in Albany. No opposition was expressed at the hear- 
ing, and medical and engineering expert testimony was given 
substantiating the statements made in the petition. Following 
the hearing, a final order was made creating the Black river regu- 
lating district and there has been filed with the Secretary of State, 
and with the county clerks of Jefferson, Hamilton, Lewis, Oneida 
and Herkimer counties, a map of the so-called Black river regu- 
lating district, together with the certificate of the Commission's 
order for its creation. The next step will be appointment by 

324 



IifPitovBMxzrr of Black Riveb Watkbshed 325 



State Conservation Commiiaion [Vol. 20] 



Governor Smith of the Black River Regulating Board, who will 
prepare the necessary plans for the improvements. After the 
approval of these plans by the Conservation Commission and the 
organization of the machinery necessary to finance the project, 
the work of building the reservoirs will be put into effect. 

During the past three years the Conservation Commission has 
spent much time in making surveys of the Black river and investi- 
gating its power possibilities. It has maintained a number of 
stream gauging stations and has prepared maps and plans and 
issued reports which will form the basis of any improvements 
which may be made by the Black Biver Regulating Board. 

According to the Conservation Commission the most feasible 
of the many undeveloped storage sites on this watershed are the 
enlarged Forestport reservoir on the Black river ; Higley Mountain 
and Panther Mountain reservoirs on the Moose river ; and Beaver 
lake, Stillwater reservoir, and Lila lake on the Beaver river. 
By the construction of these reservoirs the Commission estimates 
that about 4,000,000,000 cubic feet of additional storage can be 
obtained on the Black river, about 10,000,000,000 cubic feet on 
the Moose river, and about 6,000,000,000 cubic feet on the Beaver 
river. 

Already there is a large industrial development on the Black 
river, composed mostly of paper and pulp factories, with water 
power installation aggregating about 90,000 installed horse power. 
Under present conditions, however, only about 30,000 horse power 
is available in dry weather. With the assistance of the above 
named reservoirs, not only could the present factories run at full 
capacity the year around, but an estimated horse power of over 
250,000 could be produced. If some of the smaller reservoir 
sites at a later date prove to be feasible this amount could be 
materially increased. 

Although all the important reservoirs will probably be ulti- 
mately constructed, even partial improvement would vastly assist 
industry in the Black river watershed and keep thousands of 
employees at work who are now thrown out of employment — not 
only at the dry season, but also in times of flood, because, para- 



326 State Department Reports 

I, i,- - — -» 

[Vol. 20] State Conservation Commission 

doxical as it may seem, too much water is almost as disad- 
vantageous to the operation of the mills as too little. 

From the standpoint of the general public, advantages resulting 
from the improvement would be the cessation of floods which 
annually damage private property, and abatement of the nuisance 
which results from debris and foul matter deposited by the reced- 
ing waters. Watertown obtains its drinking water from the 
Black river, and in the summer months when the water is very 
low and the percentage of pollution in the water is correspondingly 
high, the work of proper filtration is extremely difficult. By the 
increased dilution of the pollution with the water from the storage 
reservoirs, a vast improvement in these conditions will be realized. 



In the Matter of the Application of the Village of Newabx, 
for Approval of its Acquisition of a Source of Water Supply 
and of its Financial and Engineering Plans for the Construc- 
tion of a Water Supply System 

■ 

Water Supply Application No. 243 

(Dated May 28, 1919) 
Application approved as modified. 

By the Commission. — The village of Newark, on April 8, 
1919, filed with the Conservation Commission an application for 
approval of its acquisition of a source of water supply and of its 
financial and engineering plans for the construction of a water 
supply system. On April 29, 1919, the Commission caused the 
site of the proposed works and the proposed source of water 
supply to be inspected by its engineers. 

After due notice published in the Newark Courier and the 
Newark Union-Gazette, a hearing was held on this application 
in the Village Hall in the village of Newark on April 29, 1919 
at 2 :00 o'clock in the afternoon. At this hearing the Commission 
considered the petition, maps and plans submitted, examined 
witnesses and heard arguments for the project, as shown by the 



Application of Village of Newabx 827 

State Conservation Commission [Vol. 20] 

minutes. The petitioner was represented by John H. Egan, 
village attorney. No objections were filed and no one appeared 
in opposition. 

The project for which the approval of the Commission is asked 
is a new surface water supply to be derived from Case creek, a 
small stream rising in the hills a few miles south of the village 
near Seneca Castle. This project includes the acquisition of neces- 
sary lands and the construction of a storage reservoir, a filtration 
plant and a supply main leading from the proposed reservoir to 
the existing distribution system in the village. 

After due study of the petition and its exhibits, the evidence 
and arguments given at the hearing and the report of the engi- 
neers of the Commission on this application it appears as follows: 

The village of Newark is a municipal corporation, incorporated 
as a village in 1839 and is located in the town of Arcadia, Wayne 
county. It is a residential and manufacturing town, having a 
population of about 6,500 and is traversed by the New York 
Central railroad, the Northern Central railroad, the electric line 
of the New York State railways and the Barge canal. The 
assessed valuation, according to the last assessment roll, is 
$3,853,323. The outstanding bonded indebtedness is $98,000, 
including $24,000 water bonds. 

For a number of years the question of an additional water 
supply has been actively agitated by the inhabitants of the village. 
The present supply is obtained partly from wells and springs and 
partly from Ganargua creek, a stream which flows through the 
northerly part of the village and is locally known as Mud creek. 

The present water supply system consists of a series of springs, 
four driven wells, a pumping station, a distributing reservoir 
and distribution system covering practically the whole of the 
built up part of the village. The original waterworks system 
of the village of Newark was constructed about 1888 by a private 
water company. This system was taken over by the village in 
1905, and various additions and improvements have been made 
since that date. 

The so-called springs consist of a covered concrete collecting 



828 State Department Reports 

[Vol. 20] State Conservation Commission 

gallery and one or more lines of collecting tile laid along the 
foot of a hillside about one-half mile northwest of the village. 
Water flows by gravity to a pumping station, from which it is 
pumped to the village distribution system. The supply of water 
from these springs became insufficient for the needs of the village 
about ten years ago and an additional supply was obtained by 
drilling four eight-inch wells to a depth of about 100 feet on a 
plot of ground acquired by the village near the pumping station. 
Water is raised from these wells by an air lift pumping system 
to a sufficient height to permit it to flow by gravity from the 
wells to the above mentioned pumping station, which is located 
about midway between the springs and wells. From the pumping 
station the water is pumped to the village distribution system 
through a twelve-inch cast-iron force main. The distribution 
system consists of about sixteen miles of cast-iron pipe from four 
inches to twelve inches in diameter and about 170 fire hydrants, 
so spaced as to give reasonably good fire protection. The greater 
part of the system is metered, there being 1,100 metered services 
and 200 flat rate consumers. The total cost of the existing 
system to the present date is about $100,000. 

For the past two or three years the consumption has exceeded 
the available supply from both springs and wells. The shortage 
became so serious during the winter of 1918 that a connection 
was made with Ganargua creek and water was pumped therefrom 
into the distribution system. All water taken from this creek, 
however, was sterilized with liquid chlorine before being delivered 
to consumers. During the year 1918 from one-third to one-half 
of the total quantity of water used was pumped from Ganargua 
creek. The water from this creek is grossly polluted and is unsafe 
for domestic use without complete purification by filtration and 
sterilization. The quality of the water from the springs and wells 
appears to be reasonably satisfactory, but deficient in quantity. 

While the average annual consumption is about 420,000 gal- 
lons per day, during the summer months the consumption often 
exceeds 600,000 gallons per day. The population appears to 
be increasing slowly and the water consumption per capita is 



Application of Village of Newark 329 



State Conservation Commission I Vol. 20] 



also said to be increasing. During a protracted dry period only 
about half the quantity of water required by the village can be 
obtained from the existing spring and wells. When sufficient 
water is available, reasonably good fire protection is provided 
by a 900,000 gallon reservoir located on high ground just west 
of the village line, together with one fire engine, one hook and 
ladder company and two hose carts. The superintendent of water 
works states that seven standard fire streams can be concentrated 
on a given point in the central part of the village. The static 
pressure in the business section is said to be seventy-five pounds 
per square inch. 

The village has a municipal sewerage system serving practically 
the whole of the village. The sewage is treated in a disposal 
plant consisting of course screens, Imhoff settling tanks, sprink- 
ling filters and secondary settling tanks. The effluent from the 
disposal plant is discharged into Ganargua creek. 

The project now before the Commission was formally initiated 
at a meeting of the board of trustees of the village held February 
4, 1919, at which time the submission of the matter to a vote of 
the people was authorized. The election was, accordingly, held 
on March 18, 1919, and was carried by a vote of 375 to 127. At 
the same election the village officials were authorized to issue 
bonds to the amount of $280,000 for the construction of the pro- 
posed additional water supply. On April 1, 1919, the board of 
trustees authorized the village president, F. C. Donnelly, to sign 
and execute in behalf of the village the petition now before the 
Commission. 

James P. Wells, a consulting engineer having an office in 
Rochester, made the preliminary investigations and prepared the 
plans submitted with the application. 

The watershed tributary to the proposed storage reservoir on 
Case creek has an area of approximately seven square miles, as 
shown by the maps of the United States Geological Survey. The 
land within this watershed consists almost entirely of well culti- 
vated farm land. No measurements of the flow of this stream are 
available, but it appears probable that a reasonably accurate 



330 State Department Reports 

[Vol. 20] State Conservation Commission 

estimate of its flow can be computed from the records of the Little 
Tonawanda creek at Linden. The drainage areas of these two 
streams receive nearly the same annual rainfall and have similar 
characteristics, except that the Linden watershed lies at a some- 
what higher altitude. 

These records indicate that the flow of Case creek will probably 
fall as low as 140,000 gallons per day for periods of from one 
to three months during a dry summer. With the proposed storage 
reservoir, however, having a net capacity of 180,000,000 gallons, 
the Linden records indicate that a flow of approximately 
1,400,000 gallons per day can be maintained from the watershed 
tributary to the proposed reservoir. 

The designing engineer estimates that the present average 
annual consumption of 420,000 gallons per day will probably 
be increased to not less than 650,000 gallons per day when the 
new supply becomes available. After considering the probable 
growth in population, the increase in water consumption and 
probable increase in commercial demands, the engineer estimates 
that a supply of 1,000,000 gallons per day should be sufficient 
for several years to come, and he has, accordingly, designed the 
proposed works on that basis. It appears reasonably certain 
that this quantity of water can be obtained from the proposed 
source of supply with the amount of storage provided for. 

Two sets of analyses of the water from Case creek have been 
submitted. One set of these analyses was made from samples 
collected April 10, 1919, just after a heavy rain, while the creek 
was in flood. These analvses indicate that on that date the water 
was extremely turbid, comparatively hard and contained con- 
siderable amounts of decomposing and decomposable organic 
matter. The bacterial count was extremely high and B. coli 
were present in practically all samples even as small as 0.01 c.c. 
The second set of analyses was made from samples collected April 
24, 1919, after the flood had passed and the flow had fallen to 
approximately normal spring flow. These analyses indicate that 
the turbidity on that date was comparatively low, that the water 
was moderately hard and that it still contained considerable 



Application of Village of Xewark 331 



State Conservation Commission [Vol. 20] 



decomposing and decomposable organic matter. The bacterial 
count, however, was moderate with B. coli pre cut in all 10 c.c. 
samples, in most of the 1 c.c. samples, but absent in all the 0.1 
and 0.01 c.c. samples. 

The first set of samples, taken during the flood period while the 
stream was receiving the spring drainage from heavily manured 
fields, is of little value in determining the normal quality of 
this water. The second set, however, indicates that the water is 
of fair quality for surface water, but not safe for domestic use 
without filtration or other form of purification. An inspection 
of the watershed shows no particular sources of contamination 
except farm buildings. The watershed contains about sixty 
farm houses and supports a population of perhaps 250, or about 
36 persons per square mile. 

The plans of the village provide for filtration of this water and, 
if necessary, sterilization by liquid chlorine. The village officials 
also state that they propose to apply to the State Department 
of Health for the enactment of rules and regulations for the pro- 
tection of the watershed. 

The proposed storage reservoir is to be created by building 
a dam across Case creek at a point perhaps one-half mile above 
its junction with Flint creek, a tributary to Oanandaigua lake 
outlet. It will have an area at flow line of about 110 acres and 
a maximum depth of about 22 feet. With the proposed draft 
of 10 feet the capacity will be about 198,000,000 gallons. 

The designing engineer estimates the loss due to evaporation 
at about 18,000,000 gallons, leaving 180,000,000 gallons net stor- 
age. The land within the reservoir basin is chiefly farm land, 
from which it is proposed to remove all brush, trees and similar 
matter. 

The main dam is to be an earth and concrete structure 450 
feet long with a maximum height of 20 feet. The earth section 
will have slopes of 1 on 2 with a top width of 10 feet and a free- 
board of 5 feet. A concrete core wall extending to rock or imper- 
vious material is provided. The spillway, located near the 
westerly end of the dam, will be a concrete weir of gravity type, 
80 feet long, 10 feet high with crest elevation 685. five feet 



332 State Department Reports 

[Vol. 20] State Conservation Commission 

below the top of the adjacent earth embankments. A concrete 
core wall will extend 5 feet below the base of the dam, presumably 
to rock or impervious material. A ledge of shale rock is exposed 
in the bed of the creek at the dam site. The soil at this point 
appears to be a reasonably impervious sandy and clayey loam. 
The spillway will discharge into a concrete paved channel leading 
to the creek below the dam. This channel will be paved with a 
twelve-inch slab of concrete laid between concrete retaining walls 
four feet high above the top of the pavement 

In addition to the main dam a long low dike across a depres- 
sion just east of the main dam will be required. This dike will 
be about 2,300 feet long with a maximum height of 28 feet, but 
for the greater part of the length the height will be less than 5 
feet. A concrete core wall is provided in the higher section 
of the dike. The slope of the upstream side of this dike will be 
1 on 2% on the higher part of the dike and 1 on 2 on the lower 
sections. The downstream slope will be 1 on 2 throughout The 
top width will be 10 feet on the higher part of the dike and 8 
feet on the lower parts. The upstream face of all earth struc- 
tures subject to wave wash is to be riprapped with stone to a 
depth of 12 inches. 

The outlet works will be located at a point about 350 feet from 
the easterly end of the dike and will consist of a fourteen-inch 
cast-iron pipe laid on a concrete foundation in a trench under 
the dam with two concrete collars or water stops between the 
intake and the core wall. A reinforced concrete gate well is to 
be constructed in the middle of the dam and equipped with a 
fourteen-inch flanged gate valve operated by a hand wheel at the 
top of the well. The entrance to the pipe is to be protected by a 
concrete intake chamber 4 feet square and 4 feet deep, covered 
by a white oak rack made up of two-inch bars spaced seven inches 
center to center. 

The regulating gate chamber is to be a reinforced concrete 
structure 8 feet by 12 feet in plan and 7 feet deep, inside dimen- 
sions, located about 50 feet below the foot of the dam. It will 
be equipped with three fourteen-inch gate valves and a screen 



Application of Village of Nbwabk 333 



State Conservation Commission [Vol. 20] 

u fish trap." The valves are so arranged that the water may be 
passed to the filtering plant and discharged into a brook at a point 
about 130 feet from the regulating chamber. The fish trap is 
located between two of the valves on the line to the filter plant 
and may be opened for the removal of its contents. 

The purification works will be located in a brick and concrete 
building located below the dam and adjacent to the above men- 
tioned gate chamber. The plant will consist of an aerator, a 
precipitation basin, a mechanical gravity filter and a clear water 
well. The aerator will be of the fountain type and will be oper- 
ated by the head of water in the reservoir. The precipitating 
basin will be of the usual type for the use of aluminium sulphate 
as a precipitant. The filters will be of the usual mechanical 
gravity type and will be constructed in two sections, each having 
a capacity of 500,000 gallons per day. The clear water well will 
be located under the filters and will have a capacity of approxi- 
mately 36,000 gallons. The plant is to be equipped with rate 
controllers, loss of head gage and clear water well gage. The 
detail plans for the filtration plant will be supplied by the bidders 
thereon and have not yet been submitted. 

Water will be conducted from the clear water well to the vil- 
lage distribution system through a fourteen-inch cast-iron supply 
main about 38,000 feet long. The high flow line of the reservoir 
will be at elevation 685 and the low flow line at 675, while the 
surface of the distributing reservoir in the village is 630, leaving 
a minimum gross head of 45 feet. The head loss in the filter 
plant is estimated by the designing engineer at 7 feet, leaving 
38 feet for friction head in the pipe line. This is approximately 
1 foot per 1,000. With this friction loss a fourteen-inch cast- 
iron pipe after several years use should have a carrying capacity 
of approximately 1,050,090 gallons per day. This is slightly in 
excess of the estimated maximum requirement. 

The supply main will be connected with the village distribu- 
tion system in the southerly part of the village at a point near 
the intersection of Main and Maple streets. No changes in the 
distribution system are contemplated in this application. The 
pipe line will cross two streams, namely, Flint creek and Canan- 



334 State Department Reports 



[Vol. 20] State Conservation Commission 



daigua lake outlet. At these crossings the pipe will be laid in 
a trench excavated in the beds of the streams and will be encased 
in concrete. It will be equipped with air vents and blow-off 
valves at various points and will be laid with an average cover of 
three and one-half feet. 

The designing engineer estimates the cost of the proposed 
works as follows: 

Dams and dikes $62,825 00 

Filtration plant 21,000 00 

Laying pipe 27,607 50 

Furnishing pipe valves, etc 89,690 00 

Fences 1,000 00 

Land and rights of way. 32,000 00 

Engineering and contingencies, 10 per cent 23,412 25 

Total $257,534 75 

Authorized bond issue $280,000 00 



It appears probable that the work can be constructed within 
the estimated amount and that ample provision has been made 
for the financing of the work. 

All structures for which plans have been submitted appear 
to have been designed in accord with recognized practice and, if 
carefully constructed, should be safe for the purposes for which 
they are intended. 

It is estimated that about 266 acres of land will be required 
for the proposed reservoir. Of this amount it is estimated that 
perhaps 60 acres may later be sold. 

The pipe line, in general, will follow the highways, but about 
two miles of it will be laid across private lands. It appears 
probable that all necessary lands and rights of way can be obtained 
within the estimate of $32,000 therefor. 

There are several other possible sources of supply which appear 
to have been rather extensively investigated by the designing 
engineer. There are two other streams, one on either side of Case 



Application of Village op Kbwabk 335 



State Conservation Commission [Vol. 20] 

creek, from which a gravity supply could probably be obtained, 
but neither appears to offer advantages over the stream selected 
by the designing engineer. The only logical source of supply 
located near the village appears to be Ganargua creek. This 
water is grossly polluted and would require constant pumping. 
A project to utilize this source of supply was decisively voted 
down by the electors of the village in July, 1918. The designing 
engineer has submitted cost curves, which indicate that the annual 
cost of the supply from Ganargua creek, properly filtered and 
sterilized, would be somewhat cheaper than the proposed supply 
from Case creek for the first twelve years of operation, but that 
after that time the Case creek supply would be materially cheaper 
than that from Ganargua creek. 

It does not appear that the taking of the proposed water 
supply from Case creek by the village of Newark will adversely 
affect the water supply interests of any other community. The 
available supply of water from Case creek can be materially 
increased by raising the dam and thus increasing the capacity 
of the reservoir. 

The legal damages which may be caused by the execution 
of the plans of the petitioner do not appear to be such as to 
require any special consideration or legislative enactment in 
order that they may be equitably determined and paid. 

In consideration of the above, and subject to the modifications 
hereafter stated, the Commission therefore finds and determines : 

First That the plans proposed are justified by public necessity. 

Second. That said plans provide for the proper and safe con- 
struction of all work connected therewith. 

Third. That said plans provide for the proper protection of 
the supply and the watershed from contamination and for the 
proper filtration of such additional supply. 

Fourth. That said plans are just and equitable to the other 
municipalities and civil divisions of the State affected thereby and 
to the inhabitants thereof, particular consideration being given 
to their present and future necessities for sources of wate? supply. 

Fifth. That said plans make fair and equitable provisions for 
the determination and payment of any and all legal damages to 



336 Stats Department Reports 

[Vol. 20] State Conservation Commission 

persons and property, both direct and indirect, which will result 
from the execution of said plans or the acquiring of said lands. 
Provided, however, that the said application, maps and plans 
as submitted shall be modified and the Commission does hereby 
determine that they be modified and that the work done there- 
under be subject to the following conditions: 

1. All work proposed in this application shall be completely 
constructed in accordance with plans which have been submitted 
to and approved by this Commission. 

2. Contracts for the proposed filter plant shall not be let, nor 
work started thereon, until complete detail plans therefor have 
been submitted to and approved by this Commission. 

3. The village authorities shall apply to the State Department 
of Health for rules and regulations for the protection of the 
watershed, and shall enact and diligently enforce such rules and 
regulations. 

4. After these works have been constructed they shall be 
inspected by and be subject to the approval of this Commission, 
and such works shall not be operated until permit to do so has 
been issued by this Commission, as provided by section 523 of the 
Conservation Law. 

Wherefore, the Conservation Commission does hereby approve 
the said application of the Village of Newark as thus modified. 
In witness whereof, the Conservation Commission has 
caused this determination and approval to be signed 
by the Deputy Commissioner and has caused its offi- 
[t*. s.] cial seal to be affixed hereto and has filed the same 
with all maps, plans, reports and other papers relat- 
ing thereto in its office in the city of Albany this 
28th day of May, 1919. 

Conservation Commission 

A. MacDonald, 
Deputy Commissioner 
Attest: 

Warwick S. Carpenter, 

Secretary to the Commission 



Application of Water Combs, op Glenwood District 337 



State Conservation Commission [VoL 20] 



In the Matter of the Application of the Board of Water Com- 
missioners of the Glenwood Water District for Approval 
of its Acquisition of a Source of Water Supply and of Its 
Financial and Engineering Plans for the Construction of a 
Water Supply System 

Water Supply Application No. 242 

(Dated June 9, 1919) 
Application approved as modified. 

By the Commission. — The water commissioners of the Glen- 
wood water district, on April 4, 1919, filed with the Conserva- 
tion Commission an application for approval of its acquisition 
of a source of water supply and of its financial and engineering 
plans for the construction of a water supply system. On May 2, 
1919, the Commission caused the site of the proposed works and 
the proposed source of water supply to be inspected by its 
engineers. 

After due notice published in the Sea Cliff News and the Glen 
Cove Echo a hearing on this petition was held in the office of 
Harry W. Moore, attorney for the Glenwood water district, in 
the village of Mineola on May 2, 1919, at 10:00 o'clock in the 
forenoon. At this hearing the Commission considered the petition, 
maps and plans submitted, examined witnesses and heard argu- 
ments for the project as shown by the minutes. The petitioner 
was represented by Harry W. Moore, attorney at law. Messrs. 
Walter E. Sexton and Edward Gilligan appeared for the applicant. 
No objections were filed and no one appeared in opposition. 

The project for which the approval of the Commission is asked 
consists of the construction of a distribution system covering the 
built-up part of the Glenwood water district and of a contract with 
the Roslyn water district for a supply of water. 

After' due study of the petition and its exhibits, the evidence 

and arguments given at the hearing and the report of the 

engineers of the Commission on this application, it appears as 

follows : 

The Glenwood water district was formed under the provisions 
State Deft* Reft.— Vol. 20 22 



BBS State Department Ripoets 

[VoL 20] State Conservation Commission 

of the Town Law by the town board of the town of North Hemp- 
stead, county of Nassau on March 3, 1919. It is located on the 
easterly shore of Hempstead harbor in the northerly part of the 
town of North Hempstead. The district has an area of about S30 
acres and is bounded on the north by the town of Oyster Bay, on 
the southwest by the Port Washington water district and on the 
southeast by the Koslyn water district. The territory within the 
district is but sparsely built up, consisting largely of country 
homes occupied only during the summer months. The perma- 
nent population is estimated from 200 to 300 people. The assessed 
valuation of the taxable property within the district is $442,699. 

The project for the construction of a water supply system was 
initiated by petition of the owners of more than 51 per cent of 
the taxable property lying within the district. This petition was 
presented to the town board on March 3, 1919, and the district 
was created on the same date. On March 17, 1919, Messrs. Ben- 
jamin T. Mott, Edward E. Bedell and Samuel Thorn, all resi- 
dents of the district, were appointed water commissioners. The 
board of water commissioners of the Glenwood water district was 
officially organized on March 22, 1919, and Benjamin T. Mott 
was elected president and Samuel Thorn secretary of this district 
The W. E. Sexton Company of Mineola, N. Y., were engaged as 
engineers for the district. 

At the present time there is no public water supply system 
within the district and the inhabitants are obliged to obtain their 
water from wells, springs and cisterns. There is no fire pro- 
tection except that provided by a volunteer fire company made up 
of residents of the towns of North Hempstead and Oyster Bay. 
This company has a fire station in the town of Oyster Bay near 
the northerly line of the Glenwood water district. Water for 
fire fighting purposes is obtained from the waterworks system of 
the Sea Cliff Water Company. The protection thus afforded is 
entirely inadequate and fire insurance rates have been materially 
increased within the past few months. 

The officials of the water district propose to purchase a supply 
of water from the Roslyn water district and to construct a dis- 
tribution system within the Glenwood water district Subject to 



Application of Water Comes, of Glenwood District 339 

State Conservation Commission [Vol. 20] 

the approval of the Conservation Commission, a contract has been 
made with the Eoslyn water district to supply the Glenwood 
water district with water at the initial rate of twenty cents per 
1000 gallons. 

The Roslyn water supply is derived from three eight-inch 
wells driven to a depth of about 250 feet at a point near the 
southwesterly shore of Hempstead Harbor in the village of Eos- 
lyn. These wells have a total capacity of about 1,000,000 gal- 
lons per day, of which only about 360,000 gallons per day is 
used by the Roslyn water district. A surplus of nearly 700,000 
gallons per day is, therefore, available for other purposes. The 
designing engineer estimates that the maximum requirements of 
the Glenwood water district will not exceed 100,000 gallons per 
day for several years to come. 

No analyses of this water have been submitted, but water from 
deep wells on Long Island has been very generally used in this 
vicinity and has been found uniformly pure and satisfactory for 
all domestic purposes. The sanitary conditions around the Ros- 
lyn pumping station are good and there is no reason to doubt 
the purity of the water. 

It is proposed to connect the distribution system of the Glen- 
wood water district with the Roslyn mains at the intersection of 
Bryant avenue and Bulls Head road, which forms the boundary 
between the Roslyn and Glenwood water districts. From this 
point about 8,000 linear feet of six-inch cast-iron pipe will be 
laid in the streets and roads of the Glenwood water district cover- 
ing practically the whole of the built-up part of the district. The 
water used will be measured by a six-inch compound meter set at 
the connection with the Roslyn mains. The distribution system 
will be provided with twenty fire hydrants, so spaced as to pro- 
vide reasonably good fire protection within the Glenwood water 
district. The designing engineer estimates that it will be possiblo 
to concentrate two standard fire streams on any building within 
the district. 

The designing engineer estimates the cost of this distribution 
system at $25,000. It appears probable that the work can be 
constructed within the amount of the estimate. 

The Roslyn water supply system has been in use for several 



340 Stats Department Rjcpobtb 



[VoL 20] State Conservation Commission 

years and there is no reason to doubt the safety of either mains or 
pumping plant. The distribution system of the Glenwood water 
district appears to have been designed in accord with accepted 
practice, and if properly constructed, it should be safe for the pur- 
poses for which it is designed Owing to the high quality of 
water derived from the deep wells in. the Long Island sands, it 
does not appear necessary to provide at this time for the filtration 
or other purification of this water. The proposed water mains 
and pipes of the Glenwood water district are all to be laid within 
the public streets and no lands are to be acquired by the district 

While the Glenwood water district could develop its own source 
of water supply by constructing wells within the district along 
the easterly shore of Hempstead Harbor similar to those devel- 
oped by the Eoslyn water district, it would not be economical to 
do so at the present time because of the large investment required 
and the high operating expenses incidental to the supplying of 
the small quantity of water required by the district. Inasmuch 
as the Roslyn water district has a large surplus of water, it will 
be more economical for both districts to utilize the same source of 
supply, as provided in the plans submitted. 

The approval of this application will have no effect on the 
water supply interests of any other community, except the Ros- 
lyn water district, and the supply of this district can be mate- 
rially increased by the construction of additional wells, if such 
action should in the future become necessary. 

The legal damages which may be caused by the execution of 
the plans of the petitioner do not appear to be such as to require 
any special consideration or legislative enactment in order that 
they may be equitably determined and paid. 

In consideration of the above, and subject to the modifications 
hereafter stated, the Commission therefore finds and determines : 

First That the plans proposed are justified- by public neces- 
sity. 

Second. That said plans provide for the proper and safe con- 
struction of all work connected therewith. 

Third. That said plans provide for the proper protection of 
the supply and the watershed from contamination and that filtra- 
tion is at the present time unnecessary. 



Application 0* Watee Comes, of Glenwood District 341 

State Conservation Commission [Vol. 20] 

Fourth. That said plans are just and equitable to the other 
municipalities and civil divisions of the State affected thereby 
and to the inhabitants thereof, particular consideration being 
given to their present and future necessities for sources of water 
supply. 

Fifth. That said plans make fair and equitable provisions for 
the determination and payment of any and all legal damages to 
persons and property, both direct and indirect, which will result 
from the execution of said plans or the acquiring of said lands. 

Provided, however, that the said application, maps and plans 
as submitted shall be modified and the Commission does hereby 
determine that they be modified and that the work done there- 
under be subject to the following conditions: 

1. All the work proposed in this application shall be com- 
pletely constructed in accordance with the plans as hereby 
approved. 

2. After these works have been constructed they shall be 
inspected by and be subject to the approval of this Commission, 
and such works shall not be operated until permit to do so has 
been issued by this Commission, as provided by section 523 of 
the Conservation Law. 

Wherefore, The Conservation Commission does hereby approve 
the said application of the Glenwood water district as thus 
modified. 

In Witness Whereof, the Conservation Commission has 
caused this determination and approval to be 
signed by the deputy commissioner and has caused 
[l. b.] its official seal to be affixed hereto and has filed the 
same with all maps, plans, reports and other papers 
relating thereto in its office in the city of Albany, 
this 9th day of June, 1919. 

CoNSEBVATION COMMISSION 

A. Macdonald, 
Deputy Commissioner 
Attest: 

Wabwick S. Cabpenteb, 

Secretary to the Commission 



842 State Department Reports 



[Vol. 20] State Conservation Commission 



In the Matter of the Application of the Village of Sidney for 
Approval of its Acquisition of the Source of Water Supply and 
Plant Property and System of the Sidney Water Works Com- 
pany 

Water Supply Application No. 245 

(Dated July 31, 1919) 
Application approved as modified. 

By the Commission. — The village of Sidney on May 20, 1919, 
filed with this Commission a petition for approval of its acqui- 
sition by condemnation of the water supply system of the Sidney 
Water Works Company, and on June 17, 1919, the Commission 
caused this water works system to be inspected by one of its 
engineers. 

After due notice published in the Sidney Record and the Sidney 
Enterprise, a hearing on this petition was held in Municipal Hall 
in the village of Sidney, on June 17, 1919, at 2 o'clock in the after- 
noon. At this hearing the Commission considered the petition, 
maps and plans submitted, examined witnesses and heard argu- 
ments for the project, as shown by the minutes. The petitioner 
was represented by the firm of Sewall & France, attorneys-at-law, 
and H. C. Stratton, of counsel. Charles C. Hopkins, consulting 
engineer, of Rochester, "N". Y., also appeared for the petitioner. 
Jerome S. Secord, attorney-at-law, appeared for the Sidney Water 
Works Company. No objections were filed and no one appeared 
in opposition. 

The project for which the approval of this Commission is asked 
consists of the acquisition by the village of the entire water sup- 
ply system of the Sidney Water Works Company including all 
lands, water rights, rights of way, franchises, reservoirs, distribu- 



Application of Village of Sidney 343 

State Conservation Commission [Vol. 20] 

tion system and all appurtenances, including tools and supplies 
necessary for the operation of the system. 

After due study of the petition and its exhibits, the evidence 
and arguments given at the hearing and the report of the engineers 
of the Commission on this application, it appears as follows : 

The village of Sidney was incorporated under the provisions of 
the Village Law in 1888. It is located on the Susquehanna river, 
just above the mouth of the TJnadilla river in the town of Sidney, 
Chenango county. The Delaware and Hudson and the New York, 
Ontario and Western railroads pass through the village. The 
population of the village according to the 1915 census was 2,641 
and it is now estimated at about 3,000. The assessed valuation 
according to the last assessment roll was $1,279,957. The bonded 
indebtedness is $40,497.50, none of which was incurred for water 
supply purposes. 

Since 1889, a public water supply system has been operated 
in the village of Sidney by the Sidney Water Works Company, a 
domestic corporation organized under the Transportation Corpora- 
tions Law. At the present time, this company supplies water to 
the inhabitants of the village of Sidney and to other residents in 
the town of Sidney, Delaware county ; also to residents in the town 
of TJnadilla, Otsego county, and in the towns of Guilford and 
Bainbridge, Chenango county. It has a franchise to supply water 
in the town and also in the village of Bainbridge. 

The original source of water supply utilized by this company 
was Collar brook, a tributary of the Susquehanna river, from 
which water was diverted at a point about two miles southeast of 
the village, in the town of Sidney, Delaware county. At the 
present time, there are four reservoirs on this stream with capaci- 
ties respectively of 288,000 ; 4,398,000 ; 4,819,000 and 13,424,- 
000 gallons, making a total of 22,929,000 gallons on this water- 
shed. The lowermost and smallest of these reservoirs, which was 
really built to intercept a leak under the dam of the reservoir 
immediately above it, is at an elevation of 206 feet above the level 
of the railroad tracks at the Sidney station. 



344 State Department Repobts 



[Vol.20] State Conservation Commission 



In passing from reservoir No. 2 to the lowermost reservoir (No. 
1) the water flows through a bed of coarse gravel and from thence 

m 

into a well or flume house, the discharge from which is regulated 
by a float valve. From the flume house, the water flows to a small 
gate house and from thence through an aeration fountain into 
reservoir No. 1. In the bottom of this reservoir is installed a 
rather crude mechanical filter consisting of two rectangular con- 
crete tanks twelve by fourteen feet in plan and eleven feet deep, 
in the bottom of which is a strainer system of the ordinary type, 
covered by a bed of sand. No coagulant is used with this filter 
and it can be washed only by drawing down the water in the 
reservoir and* allowing water from No. 2 to flow through it in the 
reverse direction. 

From reservoir No. 1 to the village distribution system, the 
water is conducted through an eight-inch cast iron pipe. It is 
estimated that Collar brook system delivers perhaps one-third of 
the water supplied by this company to its customers. 

The total drainage area tributary to the reservoirs on Collar 
brook, as shown by the United States Geological Survey map, is 
about one and six-tenths square miles, consisting largely of farm 
lands, though a considerable percentage, perhaps 40 to 50 per cent 
of the area, is wooded. Several farm houses are located on the 
watershed and cattle are pastured upon it and watered in some of 
the streams tributary to Collar brook. No serious sources of pol- 
lution exist, except the few farm houses and the pasture lands 
above mentioned. The nearest farm, located immediately above 
the upper reservoir, has been acquired by the water company and 
the buildings are to be torn down or moved away. 

No recent analyses of this water are available, but analyses 
made three or four years ago indicate that it is at times contam- 
inated by bacteria of animal origin and that the filters are not 
efficient in removing such contamination. 

As the supply from Collar brook proved insufficient to meet the 
demands of the customers of the water company, in 1901 a six- 
inch pipe was laid from Sidney to a dam on Guilford creek. This 
creek is the outlet of Guilford lake and it flows through the town 



Application of Village op Sidney 345 

State Conservation Commission [Vol.20] 

of Guilford in Chenango county into the Unadilla river. The 
water company purchased or constructed a diverting dam on this 
stream some three miles above the village. It also purchased a 
small storage reservoir on the same stream nearly two miles fur- 
ther upstream. This intake dam is at an elevation of 164 feet 
above the railroad tracks at the station. This head is too small to 
permit the water to be used in connection with the Collar brook 
supply. The water of Guilford creek at this point drains from a 
rather thickly settled farming community and is undoubtedly 
contaminated and unfit for use without purification. 

In 1904, two Jewell pressure filters were installed to purify 
this supply and they are in use at the present time for the supply 
of the hamlet of East Guilford. These filters are not provided 
with coagulation tanks and though equipped with alum pots, no 
coagulant is being used at the present time. There is no informa- 
tion at hand to show the efficiency of these filters, but it is 
undoubtedly very low. The village officials state that no water 
from Guilford creek is allowed to enter the distribution system in 
the village of Sidney. 

When it became evident that Guilford creek could not be used to 
augment the supply from Collar brook, the water company in 
1908 built a reservoir on Peckham brook, at a point about two and 
one-half miles northwest of the village in the town of Guilford, 
Chenango county. Peckham brook is a tributary of the Unadilla 
river, and it has above the water company's dam a drainage area 
of about four square miles, as shown by the United States Geo- 
logical Survey map. This reservoir has a capacity of 43,232,000 
gallons. Water is drawn from it through a pile of cobble stones, 
sand and gravel and then filtered through two mechanical filters 
in the gate house. These filters consist of two beds of sand and 
gravel with an underdrainage system. They operate with from 
thirty to forty feet of water on the beds, and it seems certain that 
these beds can never be effectively washed. There is no coagula- 
tion or clear water basin and no coagulant is used. 

The Peckham reservoir was originally connected to the distribu- 
tion system by a six-inch cast iron pipe, but about one-half of this 



846 State Dxpabtmjbnt Repoets 

[Vol.20] State Conservation CommiMion 

line has since been replaced with an eight-inch and ten-inch cast 
iron pipe. The elevation of the water surface in the reservoir is 
204 feet above the railroad track at the Sidney station. 

The watershed above the Peckham reservoir consists largely of 
farm and pasture land with a considerable percentage of wooded 
land. Sources of contamination exist in several farm houses 
located on the watershed, some of them close to tributary brooks. 
The water company, however, has spent considerable money in 
improving sanitary conditions and a considerable period of storage 
is provided in the reservoir itself. The older analyses, however, 
indicate that this water is sometimes contaminated by bacteria of 
animal origin and that the filters are not efficient. In past years, 
some difficulty has been experienced with growths of algae in the 
reservoir. The crude filter now in use is not well adapted to the 
removal of the tastes and odors caused by these growths. 

It is estimated that the Peckham reservoir supplies about two- 
thirds of the amount of water consumed by the village. 

The distribution system consists of about 72 feet of twelve-inch, 
5,562 feet of ten-inch, 13,212 feet of eight-inch, 29,327 feet of six- 
inch and 20,638 feet of four-inch cast iron pipe, making a total of 
about thirteen miles of cast iron pipe. In addition to this, there 
are about two and two-tenths miles of wrought iron pipe from one 
inch* to four inches in diameter. The system is* equipped with 
fifty-one fire hydrants, ninety-two gate valves and the usual num- 
ber of valve boxes and other appurtenances. 

There are no statistics as to the yield of either the Collar brook 
or the Peckham systems. With the existing storage of 23,000,000 
gallons on the Collar brook system, however, its drainage area of 
one and six-tenths square miles should be capable of supplying a 
continuous flow of about 190,000 gallons per day, based upon the 
records of other streams in this State. The Peckham system, with 
43,000,000 gallons of storage and four square miles of watershed, 
should produce on the same basis about 440,000 gallons per day, 
making a total of about 630,000 gallons per day. The yield 
from both of these systems can be materially increased by addi- 
tional storage. A suitable site for a fifth reservoir on Collar 



Application of Village op Sidney 347 

State Conservation Commission [Vol.20] 

brook exists at a point a short distance above the upper reservoir. 
The capacity of the Peckham reservoir can be materially increased 
by raising the existing dam. 

There are no statistics as to the consumption of water in the 
village, but it is estimated by the village engineer at about 600,000 
gallons per day. It is, therefore, evident that in normal times the 
Peckham and Collar brook systems will supply the ordinary 
demand and that by further development of these sources the 
probable future requirements can be taken care of without undue 
expense. The watershed tributary to Guilford creek at the East 
Guilford intake is about eighteen or twenty square miles and it is, 
therefore, evident that the low water flow of this stream will be 
more than sufficient for the few dwellings supplied from this 
source. 

As before stated, no recent analyses of the water from any of 
these systems have been submitted, but an analysis of water from 
a tap in the village, made by the State Department of Health in 
August, 1916, indicates that the water is reasonably soft and that 
it is somewhat contaminated by organic matter. The number of 
bacteria present was 550 per cubic centimeter, but bacteria of 
the coli type were absent in all samples. The watersheds are 
patrolled by an employee of the company two or three times a 
month and a careful watch is kept for sources of pollution. There 
have been no epidemics of typhoid fever or intestinal diseases in 
the village for a considerable number of years. 

Water from Collar and Peckham brooks appears to be of rea- 
sonably good quality for a surface supply, and if no new sources 
of pollution are established on the watersheds and the village main- 
tains a vigorous patrol of those areas, it will be safe to use for the 
present. Added safety to health and improved physical quality 
can be obtained by the installation of suitable filtration and sterili- 
zation plants and such plants should perhaps be installed as soon 
as the village finances will permit. The Commission reserves the 
right to require the installation of suitable sterilizing apparatus, 
or the construction of filters, whenever future conditions indicate 
the necessity therefor. 



848 State Department Reports 



[Vol.20] State Conservation Commission 



As before stated, the Ghiilford creek supply at East Guilford is 
unfit for use without purification and the existing filters are inade- 
quate. The East Guilford system is connected with the Sidney 
distribution system by a six-inch main and there appears to be no 
reason why the few consumers in East Guilford should not be 
supplied with water from the Peckham and Collar brook supplies. 
The quantity of water required would be small and would not 
materially reduce the quantity available for use in the village of 
Sidney. This would make it possible to discontinue the East Guil- 
ford supply, or to use it only for commercial purposes by laying a 
second main from the East Guilford intake to the village. The 
Commission will, therefore, require that the East Guilford supply 
be discontinued or that the existing pressure filter plant be remod- 
eled in a satisfactory manner. 

Seasonably good fire protection is provided by three volunteer 
fire companies equipped with a modern engine, hose carts and 
hose. The village eugineer estimates that it would be possible to 
concentrate four standard fire streams on any point in the built-up 
section of the village. The supply mains from the Peckham and 
Collar brook reservoirs, however, are rather small, and, in order 
to provide assurance against a shortage of water during a large 
fire the six-inch pipe remaining in the line to the Peckham reser- 
voir should be replaced with pipe not less than eight or perhaps 
ten inches in diameter. 

For a considerable number of years there has been more or less 
dissatisfaction with the rates and service supplied by the Sidney 
Water Works Company and also considerable agitation for a 
municipally owned water supply system. Proceedings toward the 
acquisition of the water supply system of the Sidney Water Works 
Company by the village were begun January 17, 1917, when a 
special election was held to authorize the purchase of the property 
rights and equipment of the Sidney Water Works Company for 
the sum of $165,000. The proposition was carried in the affirma- 
tive and, on April 6, 1917, the board of water commissioners in 
conjunction with the board of trustees of the village made an offer 
to the water works company to purchase the system at that price. 



Application of Village of Sidney 849 

State Conservation Commission [Vol.20] 

This offer was refused by the company. Condemnation proceed- 
ings were instituted shortly thereafter and Messrs. George B. Cur- 
tis, Harry M. Beardslee and Frank A. Frost were appointed con- 
demnation commissioners by Justice McCann of the Supreme 
Court. The award of the condemnation commission was filed Janu- 
ary 17, 1919, the amount of the award being $220,000, which was 
$55,000 in excess of the sum which had been authorized at the 
election held January 17, 1917. This made it necessary for the 
water commissioners to again go to the people for authority to 
raise the additional funds necessary. At an election held March 
18, 1919, the trustees were accordingly authorized to accept the 
award of the condemnation commission and to issue bonds to the 
amount of $228,000. Of this sum $220,000 is to be paid to the 
water company and the additional $8,000 is for other necessary 
expenses. The petition to the Conservation Commission was 
authorized by the board of trustees at a meeting held April 
1, 1919. 

There are no statistics available as to the original cost of this 
water works system but the award of $220,000 by the condemna- 
tion commission indicates its present value. 

Inasmuch as these dams and pipe lines have been in use from 
ten to twenty years, there appears to be no reason to question their 
safety. 

In taking over the existing works the village does not intend to 
acquire any lands other than those now in use for water supply 
purposes, or to make any material changes in the system, except 
such extensions to the distribution system as may be necessary. 
Additional land will be required only if additional storage capacity 
is to be provided, or for additional sanitary protection- 

Other sources of supply exist, among which may be mentioned 
the Susquehanna and Unadilla rivers, but these waters are highly 
contaminated and would require filtration and pumping. The 
existing system appears to be the logical source of supply for the 
village of Sidney. It does not appear that any other community 
will be affected by the acquisition of this supply by the village of 
Sidney. 



350 State Department Repobm 

[Vol. 20] State Conservation Commission 

The legal damages which may be caused by the execution of the 
plans of the petitioner do not appear to be such as to require any 
special consideration or legislative enactment in order that they 
may be equitably determined and paid. 

In consideration of the above, and subject to the modifications 
hereafter stated, the Commission therefore finds and determines: 

First That the plans proposed are justified by public necessity. 

Second. That said plans provide for the proper and safe con- 
struction of all work connected therewith. 

Third. That said plans provide for the proper protection of the 
supply and the watershed from contamination and that filtration 
is at the present time unnecessary. 

Fourth. That said plans are just and equitable to the other 
municipalities and civil divisions of the State affected thereby 
and to the inhabitants thereof, particular consideration being 
given to their present and future necessities for sources of water 
supply. 

Fifth. That said plans make fair and equitable provisions for 
the determination and payment of any and all legal damages to 
persons and property, both direct and indirect, which will result 
from the execution of said plans or the acquiring of said lands. 

Provided, however, that the said application, maps and plans 
as submitted shall be modified and the Commission does hereby 
determine that they be modified and that the work done thereunder 
be subject to the following conditions: 

First. No water from Guilford creek shall be used, except 
after purification by a properly equipped plant in a manner 
satisfactory to this Commission. Until such plant has been con- 
structed the use of water from Guilford creek shall be discon- 
tinued and the inhabitants of East Guilford shall be supplied 
with water from the Collar brook and Peckham water supplies. 

Second. Whenever future analyses or changed conditions show 
it to be necessary, in the opinion of this Commission, the village 
shall install properly designed and equipped sterilization or filtra- 
tion plants on the Collar brook and Peckham water supply sys- 



Application of Village of Voobheesville 351 



State Conservation Commission [Vol. 20] 

terns, and thereafter all water taken from these sources of supply 
shall be adequately purified before being delivered to consumers. 
Wherefore, the Conservation Commission does hereby approve 
the said application of the village of Sidney as thus modified. 

In witness whereof, the Conservation Commission has 
caused this determination and approval to be signed 
by the Commissioner and has caused its official seal 
[seal] to be affixed hereto and has filed the same, with all 
maps, plans, reports and other papers relating thereto, 
in its office in the city of Albany this 31st day of 
July, 1919. 

Conservation Commission, 
A. Macdonald, 

Deputy Commissioner. 
Attest : 

Warwick S. Cabpente*, 

Secretary to the Commission, 



In the Matter of the Application of the Village of Vooehees- 

ville for Additional Water Supply 

Water Supply Application No. 244 

(Dated August 21, 1919) 
Application approved at modified* 

By the Commission. — The village of Voorheesville, on May 20, 
1919, filed with this Commission a petition for approval of its 
plans for an additional water supply. On June 20, 1919, the 
Commission caused the site of the proposed works and the pro- 
posed source of water supply to be inspected by its engineers. 

After due notice published in the Altamont Enterprise and the 
Albany Evening Journal, a hearing on this petition was held in 
the village hose house in the village of Voorheesville on June 20, 
1919, at 2 o'clock in the afternoon. At this hearing the Com- 



852 State Djcpabtmjent Repobti 



[Vol.20] State Conservation Commission 



mission considered the petition, maps and plans, examined wit- 
nesses and heard arguments for the project as shown by the 
minutes. The petitioner was represented by Stephen J. Daring, 
village attorney, and William R. Kimmey, village engineer. No 
objections were filed and no one appeared in opposition. 

For the purpose of increasing its supply of water for domestic 
use and fire protection, the village proposes to acquire a spring 
which flows from the rocks on the easterly side of the Helderberg 
mountains and to pipe the water therefrom to its existing reser- 
voir. The proposed improvements will consist of a concrete col- 
lecting basin and about one mile of three-inch galvanized iron 
pipe leading from the spring to the reservoir, together with neces- 
sary lands and rights of way. 

After due study of the petition and its exhibits, the evidence 
and arguments given at the hearing, and the report of the en- 
gineers of the Commission on this application, it appears as 
follows : 

Voorheesville was incorporated as a village under the pro- 
visions of the Village Law in 1899. It is located in the town of 
New Scotland, Albany county, at the junction of the Delaware 
and Hudson and the West Shore railroads, about eleven miles 
west of the city of Albany. The population, according to the 
census of 1915, was 550 and it is now estimated at about 700. 
The assessed valuation of the taxable property within the village 
is $285,000. The bonded indebtedness is $9,000, of which $8,000 
was issued for water supply purposes. 

For several years past the village has suffered from shortage 
of water during the summer months. The deficiency has at 
times been so severe that it has been necessary to prohibit the 
sprinkling of lawns and to restrict consumption in every possible 
way. In spite of these precautions the distributing reservoir 
has at times been completely emptied and the pressure in the 
mains has fallen almost to zero. Because of this shortage of 
water the fire underwriters have recently increased fire insurance 
rates nearly 50 per cent. 

The present water supply system of the village was constructed 



Application of Village of Voobhebsville 353 

State Conservation Commission [Vol.20] 

in 1900. Water is obtained from six springs located on the 
easterly side of the Helderberg mountains about four miles south- 
west of the village and about one mile west of the hamlet of 
New Salem. It is said that only two of these springs flow con- 
tinuously in a dry period. From these springs the water flows 
by gravity through iron pipes into a storage reservoir located 
just north of the highway leading through New Scotland and 
New Salem. This reservoir has an area of about one-half acre 
and a capacity of about 700,000 gallons. It is protected from 
contamination by surface drainage from the above-mentioned 
highway by a well kept ditch along the upper side of the reservoir. 
From the reservoir to the village distribution system the water 
is conducted through a four-inch cast-iron pipe about three and 
one-half miles long. The distribution system consists of about 
16,000 feet of four-inch cast-iron pipe, covering substantially the 
whole of the built-up part of the village. The system is equipped 
with forty fire hydrants. 

There are no available records of the yield of the springs from 
which the village derives its water supply, but the supply appears 
to be sufficient for the reasonable needs of the village during 
perhaps eight or nine months of the year. Services are not 
metered and there is no record of consumption, but it is estimated 
at from 30,000 to 35,000 gallons per day by the village engineer. 

No recent analyses of the water are available, but analyses 
made in 1916 by the State Department of Health indicate that 
the water is quite hard and that it was at that time subject to 
some active contamination which may have been due to surface 
water reaching the springs. 

Fire protection is provided by a volunteer fire department 

and one hose cart with a reel of hosa When the reservoir is 

full, two half-inch fire streams can be supplied with water under 

a pressure of forty pounds, but during the dry period when the 

reservoir is empty, the pressure drops practically to zero. It is 

thus evident that fire protection is very poor. This is partly due 

to shortage of water and partly because of the small size of the 

supply main leading from the reservoir to the village. The 
State Dipt. Kept.— Vol. 20 23 



354 State Department Repobts 



[Vol. 20] State Conservation Commission 



6tatic pressure in the central part of the village is said to be from 
ninety to ninety-five pounds. 

Proceedings toward the acquisition of an additional water 
supply were initiated on February 28, 1918, when the village 
board of trustees authorized the submission of the proposition to 
acquire and develop the above-mentioned spring supply and to 
issue bonds to the amount of $5,000 in payment therefor to a 
vote of the people at the annual village election. At this election, 
held March 19, 1918, the proposition was carried by a vote of 
forty-six to twenty. The petition to this Commission was author- 
ized by the board of trustees at a meeting held February 28, 
1919. 

The spring which the village proposes to utilize flows from a 
hole or shallow cave at the foot of a high ledge of rock on the 
easterly side of the Helderberg mountains at a point about one 
mile north of the existing reservoir and about 300 feet higher 
than the reservoir. The hillside above the ledge is densely 
wooded for at least one-half mile above the spring, and it appears 
to be well protected from contamination. There are no visible 
sources of pollution and the water should be of satisfactory quality 
for all domestic purposes. This is confirmed by analyses made 
by the State Department of Health in May, 1919, which show 
the water to be quite hard, but of excellent sanitary quality. The 
bacterial count was only ten per cubic centimeter and there were 
no bacteria of the coli type in nine samples. Filtration or other 
purification of this water does not at present appear to be 
necessary. 

No measurements have been made of the flow of this spring, 
but local people say that it has never failed even in the driest 
seasons. The flow on June 20, 1919, was estimated at from 
30,000 to 40,000 gallons per day. The village engineer states 
that from his personal knowledge of this spring he feels confident 
that during the dry season the flow of the spring will exceed 
50 per cent of its flow on that day, or from 15,000 to 20,000 
gallons per day. 

The collecting works at the spring will consist of a small con- 



Application of Village of Voorheesville 355 

State Conservation Commission [Vol. 20] 

crete collecting baain located in the cave from which the spring 
flows. From this basin the water will be piped to the existing 
distribution reservoir through a three-inch galvanized iron pipe. 
This pipe will be laid on the surface of the ground from the 
collecting basin to the foot of the talus slope below the spring, 
and from the foot of this slope to the reservoir it will be laid 
in a trench following the base of the hill. It is intended that 
the spring water shall be used only during the summer months, 
and the pipe will be shut off at the beginning of winter; but to 
prevent any possibility of freezing it is to be left entirely open 
and equipped with only one valve, which will be placed at the 
entrance to the pipe. Blow-off cocks, for the purpose of drain- 
ing the pipe, will be placed at all low points. 

The village engineer estimates that the cost of this work will 
not exceed $4,000 for the collecting basin and pipe line, and that 
the cost of the entire project will not exceed the bond issue of 
$5,000. This estimate appears to be reasonable if the necessary 
lands and rights of way can be obtained for a reasonable sum and 
without resorting to condemnation. As the pipe line between the 
spring and the reservoir will be open at the reservoir end, there 
will be no material pressure in the pipe, and there appears to be 
no reason to question its safety. Its carrying capacity will be 
considerably in excess of the estimated flow of the spring. The 
village has already purchased sixteen acres of land surrounding 
the spring and will acquire a right of way across the land lying 
between the spring lot and the distributing reservoir. 

There are several other possible sources of supply, among which 
may be mentioned Vly creek and its tributaries. The water 
from this creek, however, would require filtration, and it would 
be necessary to resort to pumping. There does not appear to be 
available any spring supply other than the one proposed in this 
application. This spring appears to be the logical and most 
practicable source of supply within the limits of its capacity. 
If the estimated flow of from 15,000 to 20,000 gallons per day 
during dry periods is realized, it is probable that the present! 
actual needs of the village will be supplied, but there will be 
little or no surplus for future increase in demand. If the popu- 



356 State Department Reports 



[Vol. 20] State Conservation Commission 

i 

lation of the village should be greatly increased, however, it will 
be necessary to rebuild practically the entire system, including 
the supply main and distribution system. 

It does not appear that the water supply interests of any other 
community will be adversely affected by the acquisition of this 
spring by the village of Voorheesville. 

The legal damages which may be caused by the execution of the 
plans of the petitioner do not appear to be such as to require any 
special consideration or legislative enactment in order that they 
may be equitably determined and paid. 

In consideration of the above, and subject to the modifications 
hereafter stated, the Commission therefore finds and determines: 

First. That the plans proposed are justified by public 
necessity. 

Second. That said plans provide for the proper and safe con- 
struction of all work connected therewith. 

Third. That said plans provide for the proper protection of 
the supply and the watershed from contamination and that filtra- 
tion is at the present time unnecessary. 

Fourth. That said plans are just and equitable to the other 
municipalities and civil divisions of the State affected thereby 
and- to the inhabitants thereof, particular consideration being 
given to their present and future necessities for sources of water 
supply. 

Fifth. That said plans make fair and equitable provisions 
for the determination and payment of any and all legal damages 
to persons and property, both direct and indirect, which will result 
from the execution of said plans or the acquiring of said lands. 

Provided, however, that the said application, maps and plans 
as submitted shall be modified, and the Commission does hereby 
determine that they be modified, and that the work done there- 
under be subject to the following conditions: 

1. All the work proposed in this application shall be completely 
constructed in accordance with the plans as hereby approved. 

2. After these works have been constructed, they shall be in- 
spected by and be subject to the approval of this Commission, 
and such works shall not be operated until permit to do so has 



Application of Village of Nassau 357 

State Conservation Commission [Vol. 20] 

been issued by this Commission, as provided by section 523 of 
the Conservation. Law. 

Wherefore, the Conservation Commission does hereby ap- 
prove the said application of the village of Voorheesville as thus 
modified. 

In witness whereof, the Conservation Commission has 
caused this determination and approval to be signed 
[l. s.] by the deputy commissioner and has caused its official 
seal to be affixed hereto and has filed the same with 
all maps, plans, reports and other papers relating 
thereto in its office in the city of Albany this 21st 
day of August, 1919. 

COKSJEBVATION COMMISSION, 

A. Macdonald, 
Attest: Deputy Commissioner. 

Wabwiok S. Cabpenter, 

Secretary to the Commission. 



In the Matter of the Application of the Village of Nassau for 
Approval of Its Acquisition of a source of Water Supply and of 
Its Financial and Engineering Plans for the Construction of 
a Water Supply System 

Water Supply Application No. 246 

(Dated August 88, 1919) 

Application approved mb modified. 

By the Commission. — The village of Nassau, on July 3, 
1919, filed with this Commission a petition for approval of its 
acquisition of a source of water supply and of its financial and 
engineering plans for the construction of a water supply system. 
On July 16, 1919, the Commission caused the site of the proposed 
works and the proposed source of water supply to be inspected 
by its engineers. 



358 State Department Repobts 

[Vol. 20] State Conservation Commission 

After due notice published in the Albany Evening Journal 
and the Knickerbocker Press a hearing on this petition was held 
in Winters Hall in the village of Nassau on July 16, 1919, at 
2 o'clock in the afternoon. At this hearing the Commission 
considered the petition, maps and plans submitted, examined wit- 
nesses and heard arguments for the project, as shown by the 
minutes. The petitioner was represented by Ralph M. Cooper, 
village attorney, and by Albrecht O. Kosegarten, village president. 
Preliminary investigations were made and plans prepared by 
Robert E. Horton, consulting engineer, of Albany, N. Y. No 
objections were filed and no one appeared in opposition. 

The project for which the approval of the Commission is asked 
consists of the driving of five wells on the flat land near the 
easterly bank of the Valatie creek in the southwesterly part of the 
village, the construction of a pumping station and a new dis- 
tributing reservoir with necessary piping and connections, and 
the acquisition of one and fifty-seven one-hundredths acres of 
land on which these structures will be located. 

The wells will be located approximately in a line, about 97 
feet apart and about 500 feet east of Valatie creek. The soil at 
this point is of gravel and sand and is now under cultivation. 
The water from the wells will be pumped into the existing dis- 
tribution system and from thence into a small reservoir located 
on the hillside near the existing reservoir. The wells will be 
constructed by excavating pits a few feet deep and by driving 
two one and one-half-inch diameter well points in each pit. These 
points will be driven to a depth to be designated by the designing 
engineer and equipped with thirty-six-inch strainers. 

The pumping station will be constructed over the middle well 
and will be connected with the two adjacent wells by suction lines 
of three-inch galvanized iron pipe. These wells will in turn be 
connected with the outer wells by lines of two-inch galvanized 
iron pipe. 

The pump house will be nine feet by twelve feet in plan and 
will be constructed of concrete and covered by a shingle roof. It 
will be equipped with a Gould triplex plunger pump, now owned 
by the village and formerly used to pump water from Valatie 



Application of Village of Nassau 359 

State Conservation Commission [Vol.20] 

creek. This pump will be operated by a seven and one-half horse- 
power electric motor. A four-inch cast-iron main about 1,200 
feet long will convey the water from the pumping station to the 
village distribution system. 

To provide a constant pumping head and separate storage for 
well water, it is proposed to construct a new reservoir, by dam- 
ming a small ravine, at a point about four hundred feet southwest 
and twelve feet higher than the existing reservoir. This new 
reservoir will have an area of about fifty by seventy-five feet and 
a maximum depth of about six feet. Its capacity will be about 
50,000 gallons, or approximately one day's consumption. 

According to the plans submitted, the dam forming this reser- 
voir will be of concrete, about seventy-five feet long, seven feet 
high and with a cut-off wall extending one and five-tenths feet 
into the shale rock foundation. A four-inch cast-iron pipe about 
six hundred feet long will connect the new reservoir with the main 
leading from the existing reservoir to the village distribution 
system. A check valve will be placed between the junction of 
the two pipes and the old reservoir. The plans do not provide 
for any changes or additions to the existing distribution system. 

After due study of the petition and its exhibits, the evidence 
and arguments given at the hearing and the report of the engineers 
of the Commission on this application, it appears as follows: 

Nassau was incorporated as a village by a special act of the 
Legislature in 1819. It is located in the town of Nassau, Rens- 
selaer county, on the Albany Southern railroad, about thirteen 
miles southeast of the city of Albany. Its population is esti- 
mated at five hundred and fifty, of which about 75 per cent are 
supplied with water from the municipal system. The assessed 
valuation of the taxable property within the village limits is 
$270,000. The outstanding bonded indebtedness is $9,150, all 
of which was incurred for water supply purposes. 

Proceedings toward the acquisition of an additional water sup- 
ply were formally initiated February 28, 1919, on which date 
the village board of trustees authorized the submission of the 
project to obtain an additional supply of water and to issue bonds 
to the amount of $5,000 in payment therefor to a vote of the 



360 State Department Repobts 



[Vol. 20] State Conservation Commission 



people at the annual village election. This election was held 
March 18, 1919, and the proposition was approved by a vote of 
forty-six in the affirmative to twenty-seven in the negative. The 
petition to the Conservation Commission was authorized by the 
board of trustees at a meeting held June 30, 1919. 

The village of Nassau has been supplied with water from a 
municipally owned system since 1902. The supply is derived 
chiefly from a small stream on which a storage reservoir of about 
one million gallons' capacity has been constructed at a point about 
one mile southeast of the village. This supply is augmented by 
water from a spring and two dug wells in a field a short distance 
north of the reservoir. 

The reservoir was created by building a low earth dam with 
a masonry core wall across a small ravine. This reservoir is 
about 300 feet long and 150 feet wide and is said to be from 6 to 8 
feet deep. A masonry spillway 12 feet long, founded on 
shale rock, has been constructed on the westerly side of the reser- 
voir. There are no dwellings on the tributary watershed, which 
consists largely of farm land and has an area of about eighty-two 
acres. There is a farm road along the easterly side of the reser- 
voir, but the reservoir lot is fenced to prevent the entrance of 
domestic animals. A six-inch cast-iron pipe connects the reser- 
voir with the village distribution system. 

The above mentioned spring is housed in a covered brick col- 
lecting basin located in a pasture lot a short distance northwest 
of the reservoir. The area of the watershed tributary to this 
spring is estimated by the designing engineer at eighty-four acres. 
On this watershed two wells, each about six or seven feet deep 
have been dug and curbed with stone, and the water therefrom 
is piped to the spring collecting basin. These wells apparently 

A 

receive chiefly surface water and perhaps a small amount of 
ground water. The brick collecting basin at the spring is con- 
nected by a four-inch cast-iron pipe with the six-inch main from 
the storage reservoir. The village distribution system consists 
of about two miles of main from four inches to eight inches in 
diameter. 

There are no records of the yield of the existing sources of 



Application of Vii*lage of Nassau 361 

State Conservation Commission [Vol. 20] 

i 

supply, but it is said to be sufficient for the ordinary needs of 
the village for from eight to nine months of the year. During the 
remainder of the year the supply falls materially below the needs 
of the village. The designing engineer estimates that during a 
protracted dry period the existing sources will not yield over 
10,000 gallons per day. To relieve the resulting shortage, the 
village has, during recent years, resorted to the pumping of water 
from Valatie creek, which flows through the westerly part of the 
village. For this purpose the village has installed a Gould triplex 
pump operated by water power and having a capacity of about 
100 gallons per minute. 

The quality of the water from the springs wells and reservoir 
appears to be reasonably good for surface water. Analyses made 
by the State Department of Health in 1918 and previous years 
indicate that the water is moderately hard, reasonably free from 
objectionable color and turbidity and that it contains a moderate 
amount of nitrogeneous organic matter. Occasional high bacte- 
rial counts and the rather frequent presence of bacteria of the coli 
type indicate that it is subject to contamination of human or 
animal origin. As there are no dwellings on either watershed, 
and the locality is not frequented by human beings, it is probable 
that the contamination indicated by the analyses is due to wash 
from the surrounding farm lands. The water pumped from 
Valatie creek, however, is grossly contaminated and a menace to 
the lives and health of the people of this village. The use of 
this creek water has never been authorized by the State and this 
Commission will require that the use thereof be discontinued. 

There are no records of consumption of water by the village, 
but the designing engineer estimates the consumption at from 
40,000 to 50,000 gallons per day when available. He also esti- 
mates that 50,000 gallons per day will supply the ordinary needs 
of the village at the present time and that 60,000 gallons per day 
will provide for a reasonable period in the future. As before 
stated, the supply from existing sources, other than Valatie creek, 
falls as low as 10,000 gallons per day, leaving a deficiency of 
about 40,000 gallons per day at present requirements. 

A fair degree of fire protection is provided when water is avail- 



362 State Department Reports 

- 

[Vol. 20] State Conservation Commission 

able, but it is entirely inadequate during dry periods when the 
reservoir supply is exhausted. The average pressure in the vil- 
lage is said to be about sixty pounds. 

The designing engineer estimates that a supply of about 150,000 
gallons per day can be obtained by continuous pumping from the 
proposed wells above described. This estimate is based on pump- 
ing tests on test wells driven in the locality of the proposed wells. 
As this quantity is more than three times the quantity of water 
required to make up the deficiency in the existing supply, it 
should be unnecessary to pump more than a few hours each day 
if the estimated yield is realized. 

Analyses made by the State Department of Health in August, 
1918, indicate that the water from these wells is moderately soft 
and of very low bacterial count, with no coli present in eighteen 
samples tested. There are no visible sources of pollution and the 
water should be of satisfactory quality for all domestic purposes. 

For the protection of the wells the village proposes to purchase 
about one and twenty-nine one-hundredths acres of land on which 
the wells are to be located and to erect a substantial fence around 
the property. If the wells are thus protected against contamina- 
tion, filtration of the water appears to be unnecessary. 

After the proposed works have been constructed, it is proposed 
to keep the existing reservoir full at all times, thus providing a 
storage of about 1,000,000 gallons for fire service and reserve in 
case of breakdown of the pumping plant. Fire protection will be 
greatly improved if this plan is carried out. 

The designing engineer estimates the cost of the proposed 
improvements at $4,997.27, not including the pump which is now 
owned by the village. This estimate appears to be reasonable, 
and it is probable that the proposed works can be constructed 
within the appropriation of $5,000. 

The proposed structures appear to have been designed in accord- 
ance with accepted practice and, if constructed in accordance with 
the plans, they should be safe and adequate for the purposes for 
which they are designed. No provision, however, has been made 
for protecting the proposed distributing reservoir from contamina- 



Application of Village of Nassau 363 

I— 

State Conservation Commission [Vol.20] 

tion by surface drainage. A ditch should be constructed around 
the upper side of this reservoir in such manner as to prevent 
surface drainage from entering the reservoir. 

To safeguard the quality of the existing supplies, it would be 
advisable for the village, in conjunction with the State Depart- 
ment of Health, to enact rules and regulations for the sanitary 
protection of the tributary watersheds. 

Only two small parcels of land, aggregating one and fifty-seven 
one-hundredths acres, will be required. It is not anticipated 
that there will be any difficulty in obtaining this land at reason- 
able cost 

There are several alternative sources of supply which have 
been given rather careful consideration by the designing engineer 
and by the engineers of the State Department of Health. Among 
these supplies may be mentioned Valatie creek, Nassau pond and 
Merchants Spring. All these supplies, however, are more or less 
subject to surface contamination and all would require pumping. 
The proposed wells appear to be the logical source of additional 
supply for the village of Nassau. 

It does not appear that the construction of these wells will 
have any effect on the water supply interests of any other 
community. 

The legal damages which may be caused by the execution of 
the plans of the petitioner do not appear to be such as to require 
any special consideration or legislative enactment in order that 
they may be equitably determined and paid. 

In consideration of the above, and subject to the modifications 
hereafter stated, the Commission, therefore, finds and determines : 

First. That the plans proposed are justified by public necessity. 

Second. That said plans provide for the proper and safe con- 
struction of all work connected therewith. 

Third. That said plans provide for the proper protection of the 
supply and the watershed from contamination and that filtration 
is at the present time unnecessary. 

Fourth. That said plans are just and equitable to the other 
municipalities and civil divisions of the State affected thereby 
and to the inhabitants thereof, particular consideration being 



364 State Department Reports 



[Vol. 20] State Conservation Commission 



given to their present and future necessities for sources of water 
supply. 

Fifth. That said plans make fair and equitable provisions for 
the determination and payment of any and all legal damages to 
persons and property, both direct and indirect, which will result 
from the execution of said plans or the acquiring of said lands. 

Provided, however, that the said application, maps and plans, 
as submitted, shall be modified, and the Commission does hereby 
determine that they be modified and that the work done there- 
under be subject to the following conditions: 

1. All the work proposed in this application shall be com- 
pletely constructed in accordance with the plans as hereby revised. 

2. After the construction of these works, the waters of Valatie 
creek shall not again be used as a source of water supply for the 
village of Nassau. 

3. The proposed distributing reservoir shall be so constructed 
as to prevent the entrance of surface water therein. 

4. After these works have been constructed they shall be 
inspected by and be subject to the approval of this Commission, 
and such works shall not be operated until permit to do so has 
been issued by this Commission as provided by section 523 of the 
Conservation Law. 

Wherefore, the Conservation Commission does hereby approve 

the said application of the village of Nassau as thus modified. 

In witness whereof, the Conservation Commission has 

caused this determination and approval to be signed 

by the Commissioner and has caused its official seal 

[l. s.] to be affixed hereto and has filed the same with all 

maps, plans, reports and other papers relating thereto 

in its office in the city of Albany this 28th day of 

August, 1919. 

Conservation Commission, 

Geo. D. Pbatt, 
Attest: Commissioner. 

J. J. Fabrell, 

Assistant Secretary to the Commission. 



STATE INDUSTRIAL COMMISSION 



In the Matter of the Claim of Mary L. Fabbinotow, Widow, for 
Compensation under the Workmen's Compensation Law on 
Account of the Death of John Faerington against United 
States Railroad Administration: Long Island Railroad 
Company, Employer and Self-Insurer 

Death Case No. 54268 

(Decided February 24, 1919) 

Voluntary help — temporary employment — award made for death of work- 
man injured in helping an employee of an employer other than his own. 

Deceased, employed by a contractor, had finished his work in a freight 
yard. A short distance from where he had been working there was a 
car of miscellaneous freight, the door of which the station agent could not 
close. He called upon men working in the yard to help him and the 
deceased among others responded to the request. In closing the door 
one of the fingers of deceased was injured, tetanus developed causing 
his death. Held, that the deceased at the time of the accident was a 
temporary employee of the United States Railroad Administration and 
the railroad and is entitled to the benefits that attach to such status, 
including the right of compensation for injuries sustained; that he was 
not engaged in interstate commerce and the injuries which resulted in his 
death were accidental and arose out of and in the course of his employ- 
ment with the United States Railroad Administration and the railroad. 

This claim came on for hearing before the State Industrial 
Commission at its office, No. 230 Fifth avenue, New York city, 
on September 18, 1918, October 7, 1918, October 28, 1918, 
November 11, 1918, December 9, 1918, December 18, 1918, 
December 23, 1918, February 10, 1919, and February 24, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Joseph F. Keany, attorney for United States Railroad Admin- 
istration: Long Island Railroad Company. 

William Cocks, Jr., attorney for claimant 

365 



366 State Department Reports 

[Vol. 20] State Industrial Commission 

By the Commission. — All the evidence submitted before the 
Commission having been heard and duly considered, the Commis- 
sion makes its conclusions of fact, award and decision, as follows : 

On May 9, 1918, the day when John Farrington received his 
injuries which resulted in his death on May 23, 1918, he resided 
at Glen Cove, N. Y., and was employed by David E. Burns, Sr., 
■engaged in the business of contracting at Mill Hill, Glen Cove, 
N. Y. John Farrington was employed as a laborer. 

On May 9, 1918, John Farrington was working for his em- 
ployer, David E. Burns, Sr., in the freight yard of the Long 
Island Railroad Company, at Locust Valley, L. I. He was help- 
ing to unload a car which was in the yard containing screenings 
He finished his work for his employer about four o'clock in the 
afternoon of that day. 

The freight yard in which John Farrington was working was 
in full charge of one, Edward Schlotzhauer, who was the station 
agent and an employee of the United States Railroad Administra- 
tion, Long Island Railroad Company. Among his other duties 
he was to look after the incoming and outgoing freight and the 
cars that were in the yard. A short distance from the place where 
John Farrington was working was a car containing a consignment 
of miscellaneous cargo for various people at Locust Valley, L. I. 
The station agent, Edward Schlotzhauer, and his assistant tried to 
close the door of this car and being unable to do so, the station, 
agent called upon the men who were working in the yard, and 
among whom was John Farrington, to give him a hand in closing 
this door. The door of said freight car had become caught while 
open, and if not closed would have exposed the valuable contents 
therein. Edward Schlotzhauer and his assistant were not able 
to close the door, and it was necessary, and the necessity was 
immediate that this door be closed so as to protect the merchan- 
dise contained in the said freight car. An emergency had arisen, 
help was needed by the railroad company, and the company's 
agent in charge of its business requested and received such help 
from the said John Farrington in such emergency. John Farring- 
ton responded to the station agent's request, and assisted in theclos- 



Parbiwotow v. United States K. R Administeation 367 



State Industrial Commission [Vol. 20] 



ing of the door of said car, and in so doing, said John Farring- 
ton caught the little finger of his hand between the bracket on 
the car and the side of the car over which the door slides, and as 
a direct cause of said accident, he developed tetanus, which caused 
his death on May 23, 1918. 

At the time the said John Farrington assisted in the closing of 
the door of the freight car above referred to, at the special instance 
and request of the station agent acting within the scope of his 
authority, the status of the said John Farrington was that of a 
temporary employee of the said United States Kailroad Adminis- 
tration, Long Island Railroad Company, and he was entitled to 
all the benefits that attach to such status, including the right of 
compensation for injuries sustained. 

The injuries which resulted in the death of John Farrington 
were accidental injuries, and arose out of and in the course of 
his employment with the United Slates Railroad Administration, 
Long Island Railroad Company. 

John Farrington was not engaged in interstate commerce. 

The average weekly wage of John Farrington was the sum of 
seventeen dollars and thirty-one cents. 

John Farrington left him surviving Mary L. Farrington, 
widow, aged fifty-nine years, the claimant herein. 

It does not appear whether written notice of death was given 
to the employer within the time prescribed by section 18 of the 
Compensation Law, but it has not been established as a fact that 
Kuch notice was not given, and it is therefore presumed under 
section 21 of the Compensation Law that sufficient notice waa 
given. 

Award of compensation is hereby made against United States 
Railroad Administration, Long Island Railroad Company, Walter 
D. Hines, Director General of Railroads, employer, and self- 
insurer, to Mary L. Farrington, widow, aged fifty-nine years, at 
the rate of $5.19 weekly, during widowhood, with two years' 
compensation in one sum upon remarriage; and also to Mary L. 
Farrington, widow, in the sum of $100 on account of the funeral 
expenses of John Farrington, deceased. 



368 Static Department Reports 

[Vol. 20] State Industrial Commission 

Present payment, pursuant to said award, is due and payable 
to Mary L. Farrington, widow, in the sum of $207.60 for forty 
weeks, covering period from May 23, 1918, to February 27, 1919. 
Future payments, pursuant to said award, in the sum of $10.38 
are to be made every two weeks during the time set forth in the 
preceding paragraph. 

It is presumed under section 21 of the Compensation Law 
that sufficient notice of death was given to the employer. 



In the Matter of the Claim of F. Javier Salas, as Consul-General 
for Spain, in Behalf of Absent Claimant, Alleged Dependent 
Father, for Compensation under the Workmen's Compensation 
Law on Account of the Death of Juan Febnandez Vasquez, 
against Lackawanna Steel Company, Employer; and State 
Insurance Fund, Insurance Carrier 

Death Case No. 2599-B 

(Decided March 19, 1919) 

When death by injury does not arise out of and in the course of employment 

Deceased was employed to remove ashes from the south end of the 
basement of a boiler house. He wheeled the ashes through the only door 
at that end of the building to a car. He was last seen alive while taking 
a drink of water on the floor above the basement. Three days thereafter 
he was found dead from gas poisoning close by a water seal of a large 
gas main in a gas seal shanty at the north end of the building about 
one hundred yards from his place of work. There was no occasion for 
him to go to the north end of the building in connection with his work. 
Held, that the accidental injury which resulted in decedent's death did 
not arise out of and in the course of his employment. Award denied. 

This claim came on for hearing before the State Industrial 
Commission at Buffalo, N. Y., on February 6, 1919, February 27, 
1919, and March 19, 1919. 



Sauls v. Lackawanna Steel Co. 369 

State Industrial Commission [Vol.20] 

Bernard L. Shientag, counsel to State Industrial Commission. 
Merritt N. Baker, attorney for representative claimant. 
N". B. Ludlum, representing employer. 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Com- 
mission makes its conclusions of fact and decision, as follows: 

On December 11, 1917, the day when Juan Fernandez Vasquez 
was found dead, he resided at 94 Main street, Buffalo, N. Y. He 
was employed by Lackawanna Steel Company engaged in the 
manufacture of steel products with a plant or place of business 
located at Lackawanna, N. Y. Juan Fernandez Vasquez was 
employed in the boiler house of said plant as a laborer. 

On December 8, 1917, Juan Fernandez Vasquez was working 
for his employer at his employer's plant, in the boiler house known 
as No. 3, and was engaged in wheeling ashes from the south end 
of the basement of said boiler house on a runway, and into a car, 
to a point a short distance away. He was last seen at four o'clock 
in the afternoon of that day taking a drink of water upstairs over 
the basement where he wheeled the ashes. He was missed after 
that time, and was found on December 11, 1917, at the other 
end — the north end — of the building, in a gas seal shanty about 
twelve by twenty feet, and about one hundred yards away from 
the place where he was working, in a sitting position close by a 
water seal of a large gas main leading from the blast furnace 
to the boiler house. He was found dead from gas poisoning. 
It appears that the boiler room was about two hundred feet long. 
In the basement of said room there is but one door at the south 
end, the only door through which the said Vasquez wheeled the 
ashes. It has not, however, been established by the testimony 
presented to this Commission why the said Vasquez should have 
entered this gas seal shanty. There was no occasion for him 
to go to the north end of the building in connection with his work. 

The average weekly wage of Juan Fernandez Vasquez was the 

sum of $21.64. 

Statu Dept. Kept. — Vol. 20 24 



370 State Department Reports 

[Vol.20] State Industrial Commission 

The injuries which resulted in the death 6f Juan Fernandez 
Vasquez did not arise out. of and in the course of his employment. 

Juan Fernandez Vasquez left him surviving no wife or child 
or children, but it is alleged that he left surviving a father, an 
alien, residing at San Lorenzo, Lugo, Spain, dependent upon him 
at the time of said accident. 

Due notice of death was given to the employer. 

Award of compensation is hereby denied to the alleged depend- 
ent father of Juan Fernandez Vasquez, deceased, on the ground 
that it has not been established that the accidental injury, which 
resulted in the death of Juan Fernandez Vasquez, arose out of 
and in the course of his employment. 



In the Matter of the Claim of James H. Sullivan, for Compensa- 
tion under the Workmen's Compensation Law against Detroit 
Cadillac Motor Car Company, Employer, and Zurich 
General Accident and Liability Insurance Company, 
Ltd., Insurance Carrier 

Case No. 351567 

(Decided March 23, 1919) 

Assault by co-employee — award made. 

A doorman acting under his employer's instruction in preventing prop* 
erty from being removed from the premises without a pass is entitled 
to compensation for injuries received from an assault by a co-employee. 

This claim came on for hearing before the State Industrial 
Commission at its office, 230 Fifth avenue, New York city, on 
March 28, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Alfred F. Andrews, attorney for employer and insurance 
carrier. 

Claimant in person. 



Sullivan v. Detboit Cadillac Motor Cab Co. 371 

State Industrial Commission [Vol.20] 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Com- 
mission makes its conclusions of fact, award and decision, as . 
follows: 

On November 23, 1918, the day when James H. Sullivan 
received his injuries, he resided at No. 51 East One Hundredth 
street, New York city, and was employed by Detroit Cadillac 
Motor Car Company engaged in the business of repairing and 
selling automobiles, with offices at No. 1881 Broadway, New York 
city, and having a repair shop at Broadway and One Hundred 
and Thirty-third street, New York city. James H. Sullivan was 
employed by the Detroit Cadillac Motor Car Company at Broad- 
way and One Hundred and Thirty-third street as a doorman. 

On November 23, 1918, James H. Sullivan was working for 
his employer at his employer's plant at Broadway and One Hun- 
dred and Thirty-third street, New York city, and while engaged 
in the regular course of his employment, as a doorman, he was 
struck by a fireman, also an employee of the Detroit Cadillac 
Motor Car Company, during an altercation, and he thereby 
received injuries consisting of a fracture of the left nasal bone, 
injuries to his eye, and the loss of two front teeth. Said injuries 
disabled him from November 23, 1918, the date of said accident, 
to March 29, 1919, and on that date he was still disabled. 

It appears that a few days prior to November 23, 1918, plumb- 
era were doing work in the building of the Detroit Cadillac 
Motor Car Company at Broadway and One Hundred and Thirty- 
third street, New York city. They completed their work on said 
day and left some tools and pipe lying near the door of said build- 
ing, stating that they would send a call for them. On the morn- 
ing of November 23, 1918, an expressman called at the premises 
and requested the doorman, James H. Sullivan, the claimant 
herein, to deliver to him the tools and pipe left there by the 
plumbers. Sullivan asked the expressman for a pass or order to 
deliver the articles aforementioned to him. The expressman 
stated that he had no pass. Sullivan intended to obtain authority 
from the superintendent, when the fireman, J. W. Somerill, also 



372 State Department Reports 



[Vol.20] State Industrial Commission 



an employee of the Detroit Cadillac Motor Car Company, inter- 
fered, and during the course of an argument as to who had author- 
ity to deliver the said property to the expressman the fireman 
assaulted the doorman, James H. Sullivan, who received the 
injuries aforesaid. Prior to the accident, James H. Sullivan, 
the doorman, had received instructions from the superintendent 
for the Detroit Cadillac Motor Car Company to permit no prop- 
erty to be removed from the building without a pass. 

The average weekly wage of James II. Sullivan was the sum 
of seventeen dollars and thirty-one cents. 

The injuries sustained by James H. Sullivan were accidental 
injuries, and arose out of and in the course of his employment. 

It does not appear whether written notice of injury was given 
to the employer within the time prescribed by section 18 of the 
Compensation Law, but it has not been established as a fact that 
such notice was not given, and it is, therefore, presumed under 
section 21 of the Compensation Law that sufficient notice was 
given. 

Award of compensation is hereby made against Detroit Cadil- 
lac Motor Car Company, employer, and Zurich General Accident 
and Liability Insurance Company, insurance carrier, to James 
H. Sullivan, injured employee, for eighteen weeks covering period 
from November 23, 1918, to March 29, 1919, at the rate of 
$11.54: per week, amounting to the sum of $207.72, and this 
claim is hereby continued for further hearing. 

It is presumed under section 21 of the Compensation Law that 
sufficient notice of injury was given to the employer. 



McCaffery v. E. I. Du Pont Db Nemours & Co., Iisrc. 373 

State Industrial Commission [Vol.20] 



In the Matter of the Claim of Annie McCaffp:ry for Compensa- 
tion under the Workmen's Compensation Law against E. I. 
Du Pont De Nemours & Company, Inc., Employer and Self- 
Insurer 

Case No. 300550 

(Decided April 4, 1919) 

Resident of State, employed by foreign corporation, injured in sister State 
entitled to an award. 

Claimant, a resident of this State, employed by a foreign corporation 
in a public restaurant maintained by it incidental to its business at one 
of its plants in New Jersey, was injured by being struck by an automo- 
bile within the inclosure of the plant in returning to her dormitory from 
her place of work. Held, that the contract of employment was entered 
into in this State, that the injuries were accidental and arose out of 
and in the course of the employment. 

This claim came on for hearing before the State Industrial 
Commission at its office 230 Fifth avenue, New York city, on 
February 24, 1919, March 18, 1919, April 1, 1919, and April 4, 
1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Washburn, Carruth & Scharman, and Collins & Corbin, attor- 
neys for employer and self-insurer. 

Philip B. Adams, attorney for claimant. 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Commis- 
sion makes its conclusions of fact, award and decision as follows : 

On September 24, 1918, the day upon which Annie McCaffery 
received the injuries herein referred to, she resided at 419 West 
Eighteenth street, New York city, and was employed by E. I. 
Du Pont De Nemours & Company, Inc., a foreign corporation, 
with its principal offices and place of business at Wilmington, Del. 



374 State Department Reports 



[Vol. 20] State Industrial Commission 



Said corporation being engaged in the manufacture of explosives. 
The said Annie McCaffery was employed to work in the kitchen 
of a public restaurant maintained by the E. I. Du Pont De 
Nemours & Company, Inc., incidental to the manufacture of 
explosives and munitions, on the premises of one of its plants 
located at Haskell, N. J. 

While engaged in the regular course of her employment on said 
date while returning to the dormitory in which living accommo- 
dations were furnished to her by her employer, after having had 
her photograph taken, according to the rules laid down by her 
employer, and in execution of an order issued to her by the super- 
intendent of the restaurant hereinbefore referred to, she was 
knocked down by an automobile, which had run up onto the 
sidewalk of one of the private streets within the enclosure of 
the premises upon which the E. I. Du Pont De Nemours & 
Company, Inc., maintained its plant at Haskell, N. J., and as a 
result of which she was injured. Said injuries consisting of the 
loss of nine teeth, injury to the right side, and laceration of the 
face and head, which disabled her from the date of said accident 
for a period of nine weeks. 

The injuries received by Annie McCaffery on the said date 
.also resulted in a serious facial disfigurement consisting in an 
extensive scar beginning at the right supra orbital region and 
extending over half the face as far as the lower jaw. There 
are also sortie adhesions at the inner cantus of the right lower lip. 

The contract of employment was entered into in the State 
of New York. 

The injuries sustained by Annie McCaffery were accidental 
injuries, and arose out of and in course of her employment. 

The average weekly wage of Annie McCaffery was the sum 
of $22.50. 

It does not appear whether written notice of injury was given 
to the employer within the time prescribed by section 18 of the 
Compensation Law, but it has not been established as a fact 
that such notice was not given, and it is therefore presumed 
under section 21 of the Compensation Law that sufficient notice 
was given. 



Mtjller v. City of New York 375 

State Industrial Commission [Vol.20] 

Award of compensation is hereby made against E. I. Du Pont 
De Nemours & Company, Inc., employer and self-irlsurer, to 
Annie McCaffery, injured employee, for 9 weeks at the rate of 
$14.03 per week, amounting to $126.27; also award is made 
in the sum of $150 for other injuries; and an award is also 
made in the sum of $1,500 on account of and in view of the 
serious facial disfigurement resulting from the injuries sustained 
on September 24, 1918. Further awarded in the sum of $50 
as and for counsel fee herein, which sum is declared a lien upon 
said award. 

It is presumed under section 21 of the Compensation Law 
that sufficient notice of injury was given to the employer. 

Perkins, Lyon and Lynch, Commissioners, concur; Sayer, 
Commissioner, dissents on the ground that the accident did not 
arise out of and in the course of the employment; and further 
that the Commission is without jurisdiction under the author- 
ity of Smith v. Heine Safety Boiler Co., 224 N". T. 9. 



In the Matter of the Claim of Frieda Mtjlleb, Widow, for Com- 
pensation under the Workmen's Compensation Law, on Account 
of the Death of Charles W. Muller, against The City of 
New York, Employer and Self-Insurer 

Death Case No. 5294-A 

(Decided April 21, 1919) 

What is not farm labor — Military Law, section 187. 

Deceased at the time of his death was employed by the city of New 
York under section 187 of the State Military Law and was appointed to 
his position by the commander of squadron " A." He was subject to 
duty wherever the horses of the squadron might be sent and at the time 
of hi 8 death was working on the farm of the squadron caring for horses, 
plowing the ground for hay, etc. He was killed while driving a horse 
into the basement of the barn on the farm. Held, that deceased was not 



376 State Depabtment Reports 



[Vol. 20] State Industrial Commission 



employed in farm labor and that the injuries which resulted in his 
death were accidental and arose out of and in the course of his employ- 
ment. Award made. 

This claim came on for hearing before the State Industrial 
Commission at its office, 230 Fifth avenue, New York city, on 
March 24, 1919, and April 21, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 
William P. Burr, attorney for employer and self-insurer. 

William A. Herman, representing State Insurance Fund. 
Claimant in person. 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Com- 
mission makes its conclusions of fact and award, as follows : 

On June 7, 1918, the day when Charles W. Muller received 
the injuries which resulted in his death on June 9, 1918, he 
resided at New City, Rockland county, N. Y., and was 
' employed by the city of New York. Charles W. Muller was 
employed under section 187 of the Military Law of the State 
of New York and was appointed by the military commander 
of squadron A, cavalry, New York National Guard, a State 
organization, and was paid by the city of New York for his 
services. At New City, Rockland county, N. Y., there was a 
farm upon which Charles W. Muller was employed, which 
belongs to the squadron "A" association, which is a corporation, 
but to belong to which one must be a member of a military 
organization, and all men employed for service at this farm 
are employed by the military authorities, and may be assigned 
to duty anywhere the horses of squadron "A" are sent. At 
the farm Charles W. Muller had to clean the horses and take 
care of them, and to plow the ground when they sowed hay, 
also feeding and caring for the horses; and to do all things inci- 



Mulleb v. City of New Toek 377 

State Industrial Commission [Vol. 20] 

dental to taking care of the horses of squadron "A" while at 
this farm. 

On June 7, 1918, while Charles W. Muller was engaged in 
the regular course of his employment, and while driving a horse 
into the basement of the barn on the farm at New City, Rock- 
land county, N. Y., the sill of the barn door caught him on 
the back of the neck, crushing the shoulder blade and chest, 
as a result of which he died on June 9, 1918, at the Nyack 
Hospital, Rockland county, N. Y. 

Charles W. Muller was not engaged in farm labor. 

The injuries which resulted in the death of Charles W. Muller 
were accidental injuries, and arose out of and in the course of 
his employment. 

The average weekly wage of Charles W. Muller was the sum 
of nineteen dollars and sixteen cents. 

Charles W. Muller left him surviving Frieda M. Muller, 
widow, aged forty-seven years, the claimant herein. 

Due notice of death was given to the employer. 

Award of compensation is hereby made against the city of 
New York, employer and self-insurer, to Frieda M. Muller, 
widow of Charles W. Muller, deceased, at the rate of $5.75 
weekly, during widowhood, with two years' compensation in one 
sum upon remarriage; and to Frieda M. Muller in the sum of 
$100 on account of the funeral expenses of Charles W. Muller, 
deceased. 

Present payment, pursuant to said award, is due and payable 
in the sum of $237.75, for forty-one weeks at the rate of five 
dollars and seventy-five cents per week, covering period from June 
9, 1918, to March 23, 1919. Future payments, pursuant to said 
award, in the sum of eleven dollars and fifty cents are to be 
made every two weeks beginning on March 23, 1919, during 
the time set forth in the preceding paragraph. 



378 State Department Reports 



[Vol. 20] State Industrial Commission 



In the Matter of the Claim of Anthony DiFazio for Compensa- 
tion under the Workmen's Compensation Law against Lacka- 
wanna Bridge Company, Employer, and The Employers' 
Mutual Insurance Company of New York, Insurance 
Carrier 

Case No. 13S83-B 

(Dated April 25, 1910) 

Employee injured in attempting to board conveyance while in motion which 
waa furnished by employer for the benefit of its employeea — award 
nude. 

During a street car strike an auto truck was engaged by the employer 
to take its employees to and from work, stopping at certain designated 
points. Claimant met the truck at a place which was not a stopping 
point. The driver did not heed his signal. While the truck slowed up to 
make a turn into another street, claimant attempted to board it while 
in motion and received injuries resulting in the amputation of his left 
foot. Held, that the injuries were accidental and arose out of and in the 
course of claimant's employment. 

This claim came on for hearing before the State Industrial 
Commission at Niagara Falls, N. Y., on April 8, 1919, and April 
25, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Cohn, Chormann & Franchot, attorneys for employer and insur- 
ance carrier. 

Glenn A. Stockwell, attorney for claimant 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Commis- 
sion makes its conclusions of fact, award and decision as follows : 

On November 18, 1918, the day on which Anthony DiFazio 
sustained the injuries herein referred to, he resided at No. 1419 
Walnut street, Niagara Falls, N. Y., and was employed as a labor 



DiFazio v. Lackawanna Bridge Co. 879 

State Industrial Commission [VoL 20] 

foreman by the Lackawanna Bridge Company, with plant and 
principal place of business at Sugar street, Niagara Falls, N. Y., 
said company being engaged in the business of general building 
and construction contractors. 

During a street car strike at Niagara Falls, N. T., the Lacka- 
wanna Bridge Company engaged one William Young, a cartman 
and truckman, to take employees to and from its plant in an auto 
truck. This truck started at Niagara and Nineteenth streets, 
went up Nineteenth to Pine street, west on Pine to Fifteenth 
street, north on Fifteenth to Ashland avenue, and from there to 
Pierce, Willow, Eleventh, Highland, College to Sugar street, 
where the plant was located. The said truck made a stop at Nine- 
teenth and Pine streets for the purpose of picking up the em- 
ployees to be taken to the plant. 

On November 18, 1918, while engaged in the regular course 
of his employment, the said Anthony DiFazio met the truck men- 
tioned above at Fifteenth and Pine streets, which was not a stop- 
ping point for the said truck. Having signalled the truck to 
stop, the driver of the said truck did not heed the said signal, but 
slowed up the truck so as to turn up Fifteenth street off Pine 
street, and while the truck was moving slowly, the claimant at- 
tempted to board the truck, and in so doing his left foot was 
caught in a non-skidding chain and the spokes of the wheel, as a 
result of which his left foot was crushed to such an extent that 
it had to be amputated above the ankle. At the time of boarding 
said truck the claimant was late, and the point at which he tried 
to board the said truck was four blocks nearer the employer's 
plant than the point at which the said truck was accustomed to 
stop and pick up the employees. 

The average weekly wage of Anthony DiFazio was the sum of 
thirty-one dollars and seventy-three cents. 

The injuries sustained by Anthony DiFazio were accidental 
injuries and arose out of and in the course of his employment. 

It does not appear whether written notice of injury was given 
to the employer within the time prescribed by section 18 of the 
Compensation Law, but it has not been established as a fact that 
such notice was not given, and it is, therefore, presumed, under 



380 State Depaetment Reports 



[Vol. 20] State Industrial Commission 



section 21 of the Compensation Law, that sufficient notice was 
given. 

Award of compensation is hereby made against Lackawanna 
Bridge Company, employer, and the Employers' Mutual Insur- 
ance Company of New York, insurance carrier, to Anthony 
DiFazio, injured employee, for 205 weeks at the rate of twenty 
dollars per week, for the loss of the left foot. 

It is presumed, under section 21 of the Compensation Law, 
that sufficient notice of injury was given to the employer. 



In the Matter of the Claim of Simon Blank, for Compensation 
under the Workmen's Compensation Law, against August 
Tumminelli, Employer 

Case No. 3953 

(Decided April 30, 1919) 

Undisclosed principal — when an award may be made against agent. 

Claimant was hired and his wages were paid to him by the son of the 
proprietor of the business. He never saw the proprietor. There was no 
sign on the place of business and claimant never saw any letterhead. 
Held, that an award might be made for the accident received by claim- 
ant either against the father as an undisclosed principal or against the 
son on the ground that an agent who makes a contract without disclosing 
his agency may be held as principal. 

The claimant on June 4, 1917, received a serious accident to 
his thumb. The employer was uninsured and the first award made 
was for seven weeks at $12.50 per week, amounting to $87.50. 
This award was collected by our legal department and the case 
came on for further hearing. Thereafter, another award for 
eighteen weeks, amounting to $225, was made and a judgment for 
that amount was entered. August Tumminelli now asks to have 
the award vacated on the ground that not he but his father was the 
real employer of the claimant 



Blank v. Tumminelli 881 



State Industrial Commission [Vol. 20] 

Claimant in person. 

A. Sief and F. A. Wells, for employer. 

■ 

Lyon, Commissioner. — The award for the last eighteen weeks 
which, in conjunction with the previous award, in all twenty- 
five weeks, seems to have been made on the advice of our medical 
department that the injury had resulted in a loss of the use of a 
portion of the thumb equivalent to from one-third to one-half. 
The total award of twenty-five weeks is just half way between 
a third and a half of the loss of the use of the thumb. 

I think on the whole evidence the award is somewhat excessive 
and should be reduced to make the equivalent of one-third only 
of the thumb, which would be twenty-five weeks, seven of which, 
as already stated, have been paid, leaving thirteen weeks or a 
total award of $162.50. This, I think, is not seriously ques- 
tioned by the employer, but the question to be determined is 
whether August Tumminelli can be sustained in his contention 
that not he but his father was the employer. 

It appears without contradiction that Peter Tumminelli, the 
father, was really the proprietor of the business in which Mr. 
Blank worked. It also appears without contradiction that the 
claimant was hired by August Tumminelli, the son, and that he 
neither knew or had any reason to suspect that August Tum- 
minelli was not his real employer. He never saw Peter Tum- 
minelli and Peter Tumminelli rarely, if ever, came near the 
business. There was no sign on the place of business and claim- 
ant never saw any letterheads. Not only was the contract of 
employment made with August Tumminelli, but August Turn* 
minelli's was the hand through which his wages were paid. 
Under these circumstances, I am of the opinion that the award 
might be made against either the father or the son. Against 
the father, Peter Tumminelli, on the ground that he was an 
undisclosed principal and against the son, August Tumminelli, 
on the usual ground that an agent who makes a contract without 
disclosing his agency may be held as principal. 

In my opinion it would be most unfair to this claimant if he 



332 Stats Department Reports 

[Vol. 20] State Industrial Commission 

were compelled under these circumstances to have recourse to 
Peter Tumminelli with whom he had no conscious dealings and 
whom he never supposed to be his employer, and I think he has 
a perfect right to elect as he has to hold as his employer the man 
who held himself out as such. The award already made and 
judgment entered thereon I think should be modified and read- 
justed at $162.50 and affirmed against August Tumminelli. 

Sayer and Mitchell, Commissioners, concur. 



In the Matter of the Claim of Elizabeth Quealy, Widow, for 
Herself and Minor Children for Compensation under the Work- 
men's Compensation Law, on Account of the Death of Austin 
Quealy, against Pietrowski & Konop Company,, Employer; 
Casualty Company of America, Insurance Carrier 

Case No. 6613 

(Decided April 30, 1919) 

* Pulmonary phthisis 99 -— when not caused by fall. 

Deceased died of " pulmonary phthisis " on June 8, 1918. His widow 
claims compensation for herself and children on the theory that his 
death resulted from an accident which occurred on September 10, 1915, 
deceased falling from the fourth to the second floor of a building through 
the stairs, receiving injuries to his arm, ankle and foot. He received 
compensation for a considerable period during his life time. Evidence 
examined and held that the " pulmonary phthisis " of which deceased 
died was neither caused nor aggravated by the fall. Award denied. 

The claimant asks compensation for herself and minor children 
growing out of the death on June 8, 1918, of her husband, Austin 
Quealy, as a result, as she claims, of an accident which occurred 
on the 10th day of September, 1915. The cause of death is given 
on the death certificate as " pulmonary phthisis." The deceased 
claimed compensation in his lifetime and received it for a con- 
siderable period. At the time of his death there was an award 



Qttxalt v. Pietrowski & Kowop Co. 383 



State Industrial Commission [Vol. 20] 



for compensation amounting to a considerable sum which has 
not yet been folly paid, but the employer is making payments 
bi-weekly on account of that disability to the deceased's widow. 
The insurance carrier having failed in business, is now in the 
hands of the Insurance Department in liquidation. The deceased's 
claim for compensation filed by him in his lifetime gives the 
cause of accident as follows : " The plank on which I had to 
walk on broke, causing me to fall two flights and received a 
fracture of right ankle and contusions of arm and forearm." 
The employer's report of the injury is as follows : " Fell down 
through stairs from 4th to 2nd floor. Received cuts on right 
forearm and finger, contusions of bone and fracture of right 
ankle and foot." It will be noticed that the claimant's husband 
died nearly three years after his accident and from a cause not 
primarily connected with the accident. 

The question to be determined is whether on the evidence it 
can be found that the accident either caused or lighted up the 
pulmonary phthisis from which the deceased died. 

• 

Claimant, in person* 

M. B. Field, for employer. 

Lyon, Commissioner. — There is no evidence from attending 
physicians of the progress of Mr. Quealy toward recovery from 
the time of his accident to the time of his death, with the excep- 
tion of Dr. Conlon, who was called in after the disease had 
progressed to a very great extent and after the deceased had 
become greatly emaciated and was apparently in the last stages 
of consumption. During the period between his accident and 
his death, however, he appeared frequently at the Commission's 
office for examination by the Commission's physicians and the 
following reports were made from time to time: 

On December 16, 1915, " Examination today shows evidence 
of a fracture of os calcis, now healed and fracture of lower end 
of fibula, which is also now healed. There is, however, local 



384 State Depabtmbnt Reports 



[Vol. 20] State Industrial Commission 



pain and tenderness over posterior aspect of os calcis, some slight 
restriction in complete mobility of ankle joint and painful, defec- 
tive walking." 

May 9, 1916: "Examination of right ankle joint shows 
enlargement over external malleolus, in consequence of a fracture. 
I am not able to find evidence of a fracture of the os calcis, at 
this date. Referring to the hospital treatment which claimant 
states, I doubt whether a fracture of the os calcis existed. Claim- 
ant walks very defective, and considering his vocation as that of 
an ordinary laborer, he is not able to resume work as yet ; there- 
fore, disability to continua" 

On September 19, 1916, Dr. Ammi B. Edgar examined Mr. 
Quealy at the instance of our medical department and reported 
as follows: 

" In accordance with your request I have today examined 
Austin Quealy of 527 West 48th Street, Manhattan. 

" His general condition is good though his nutrition has suf- 
fered from the indoor life and inactivity of the last year. The 
original fractures — one through the external malleolus and one 
through the os calcis — have healed with practically no displace- 
ment and are giving no trouble at the present time and I think 
have not troubled him for some time. His trouble is due to 
double pes planus which existed long before the accident. In 
fact the arch of the left foot is more completely broken than that 
of the right which is the one that was injured. 

" The deformity is sufficient to interfere with his ability to do 
hard work. If he were fitted with shoes constructed so as to 
properly support his arches he should in a very short time be 
able to resume light work." 

On October 9, 1916, our records show the following: 

" Claims Bureau is directed to notify claimant that after 
examination by our Medical Department and after reading Dr. 
Edgar's report, they are of the opinion that he was able to per- 
form his regular work since September 19th, and case is accord- 
ingly closed to that date; that after working at least one month 
and being able to show that his inability to continue is due to 



Quealy v. Piktbowski & Kaxop Co. 385 



State Industrial Commission [Vol. 20] 



injury to His foot (on which this claim is based) he can again 
come and be examined by the Commission's Medical 
Department" 

Thereafter, apparently, the deceased returned to have his case 
reopened, for on October 8, 1917, our medical department made 
the following report: 

" The injuries (fracture os calcis and lower end of the fibula) 
have now healed with the following defects: 

" There is present an enlargement of the os calcis or heel bone, 
as well as of the lower end of the fibula with complaints of 
marked pain and tenderness over the inner aspect of the os 
calcis. Motion in the ankle joint is good though accompanied by 
complaints of pain. The arch of the foot is lowered, a traumatic 
flat foot, as an after result of his injury. 

" This condition is permanent but considering the long period 
of disability I believe that claimant can continue doing work 
which does not require his climbing up and down ladders or 
scaffolds." 

This, I think, fairly outlines all the evidence we have before 
us upon which an award for death benefits could be based and I 
am entirely unable to see how any causal connection between the 
deceased's injury and his death from pulmonary phthisis has 
been established. Mr. Quealy undoubtedly received a very severe 
injury and his confinement indoors may have somewhat affected 
his general health; nevertheless, the record shows that he was 
progressing fairly well with his injury, that his injuries healed 
to a very great extent, although probably he would never have 
been able to continue his former occupation. There is absolutely 
nothing in the record so far as I can see to show that his pul- 
monary phthisis was either caused or aggravated by his accident 
and I think an award for death benefits must therefore be denied. 

Sayer and Mitchell, Commissioners, concur. 
State Dkpt. Kept.— Vol. 20 25 



386 STAfE DePABTMENT RePOBTS 



[VoL 20] State Industrial Commission 



In the Matter of the Claim of Maby Hatoen, Widow, for Com- 
pensation under the Workmen's Compensation Law, on Account 
of the Death of Philip Hatden, against Thomas MacLaben 
Co., Inc., Employer; Travel^es* Insurance Company, 
Insurance Carrier 

Case No. 59123 

(Decided April 90, 1919) 

Delirium — death resulting from faU from window — section ai, subdivision 3, 
Workmen's Compensation Law. 

Deceased was operated upon for a "Y" fracture at the lower end of 
the humerus eight or nine days after the injury. He left the hospital 
against the doctor's advice. On reaching home he appeared to have 
a burning thirst and drank large quantities of cold water and cold 
milk and complained of excessive heat when the weather was not unduly 
warm, and while his wife was procuring more water for him to drink, 
he either fell or jumped out of the window and died. Held, that deceased 
• either fell from the window in endeavoring to get air or jumped from 
the window while temporarily insane by reason of pain and suffering 
caused by the injury and the septic condition following the operation; 
in either case his death is connected with the original injury. There 
being no substantial evidence to the contrary, it must be presumed that 
the deceased did not jump from the window with willful intent of 
injuring himself. Award made. 

The claimant's husband, Philip Ilayden, met with an injury 
on the 3d day of April, 1918, which resulted in the fracture of 
his right arm. He was attended at the New York Hospital 
where an attempt was made to set the arm, and remained in the 
hospital until the seventeenth day of April, when he insisted on 
going to his home. On reaching his home he complained of an 
inordinate thirst and drank large quantities of water and cold 
milk during the day. After he had been at his home for a time 
he asked his wife for another drink of cold water while he was 
sitting near an open window. He had complained, although the 
day was not very warm, of being oppressed with heat, and while 
his wife stepped back into another room to get him the water 
for which he had asked, he either fell or jumped out of the win- 



Hayden v. MaoLaren Co., Inc. 887 

State Industrial Commission [Vol.20] 

dow and received injuries from which he died a few days later at 
Bellevue Hospital. 

The question to be determined is whether his death has been 
traced with reasonable certainty to the accident by which he 
received a broken arm. 

Claimant, in person. 

E. A. Willoughby, for insurance carrier. 

Lyon, Commissioner. — The injury which occurred to the 
deceased on April third is thus described by the doctor at the 
New York Hospital : " Had a fracture at the lower end of the 
humerus. This is a diagram, Commissioner, of the X-ray 
picture at the time. It was what we call a 'Y* fracture at 
the lower end, — the joint portion was split off, with a good deal 
of displacement of the two lower portions of the bone. He 
was operated on about eight or nine days afterwards in an 
attempt to correct or replace those two fragments, and then four 
days after the operation he left the Hospital — against my 
advice." 

This doctor stated that when Mr. Hayden left the New York 
Hospital on April seventeenth, the wound at the elbow had 
healed although the bones had not been entirely put back into 
their place. So far as this doctor could tell, the bone was in a 
fairly good condition when he left the hospital. There was no 
evidence that the wound was then infected. On the first appear- 
ance of the case it did not seem possible to connect the apparent 
delirium which caused the deceased to throw himself from the 
window with the accident to his elbow, buA the very clear state- 
ment that Mr. Hayden after he reached home appeared to have 
a burning thirst and drank large quantities of cold milk and 
cold water of which he could not seem to secure sufficient, that 
he complained of excessive heat when the weather was not 
unduly warm and seemed troubled for breath, raised the sus- 
picion that the wound which apparently had healed at the elbow 
had not healed without intervention of a septicema. 



388 State Dkpabtment Reports 



[Vol. 20] State Industrial Commission 



With a view of clearing up this question, the record of the 
Bellevue Hospital to which he was taken after his fall from 
the window was put in evidence and the doctor who treated him 
at that hospital was called. After stating the very serious 
injuries which the deceased received by his fall from the window, 
the doctor was asked whether he examined the old injury to the 
right elbow and he replied: "We found that the arm was 
swollen and it appeared to us as if the wound was infected. We 
opened up the wound and there was a rather profuse discharge. 
Q. Of what ? A. Of what on gross appearance was pus mixed with 
blood and broken-down tissue material. * * *. As I 
remember, the elbow had been closed up, and on opening the 
wound there was, as I mentioned, a profuse discharge. The 
bones were easily visible and with a fracture at the lower end 
of the humerus which extended into the elbow joint. * * * 
This wasn't beneficient pus, the man at the time was in a toxic 
state and he ran a very irregular temperature; he ran a septic 
temperature showing that there was some apparent poisoning in 
his system." 

When asked how much pus was discharged from the elbow, the 
doctor said that it was about four tablespoonfuls. On this testi- 
mony, the question arises whether the deceased's fall from the 
window has been connected with the injury to his arm. If , as 
may have been the case, the deceased leaned from the window 
to get air which he needed on account of his toxic condition 
and lost his balance and fell to the street, I suppose there can 
be no question but that the consequent fall is connected with 
his first injury. If, on the other hand, as I am inclined to 
believe is the fact, the deceased's excessive raging internal fever 
caused by his toxic condition and the poison which had gotten 
through his system, rendered him temporarily insane and caused 
him to jump from the window, I think the case is equally made 
out as naturally following from the injury to his arm which had 
in some unexplained way become very badly infected, the pus 
as described by the doctor being not beneficient pus and it being 
large in quantity. 



Hawokth t>. Bbown, Iho. 389 

State Industrial Commission [Vol. 20] 

We are forbidden by section 21 of the law in the absence of 
substantial evidence to the contrary to assume that the deceased 
jumped from the window with the willful intent of injuring 
himself. In my opinion he either fell from .the window while 
attempting to lean out of it to get air or, driven temporarily 
out of his mind by the pain and suffering caused by the injury 
to his elbow and the septic condition following, jumped from 
the window, and in either case I think his death is connected 
with the original injury and that an award should be made. I 
would favor a finding that he jumped from the window while in 
a delirium. 

Mitchell and Sayer, Commissioners, concur. 



In the Matter of the Claim of George Hawobth, for Compen- 
sation under the Workmen's Compensation Law, against 
Davis Beown, Inc., Employer; Tbavelkbs' Insubanoe 
Company, Insurance Carrier 

Case No. 276723 

(Decided April 30, 1019) 

Whan intoxication not sole cause of accident — award made —Workmen's 
Compensation Law, section ai, subdivision 4 — place of employment 

An employee employed by his employer in New York State for work in 
a sister State, although sent to the United States government employ- 
ment office for transportation to his place of employment, is covered by 
the Workmen's Compensation Law of New York State, and an award 
will be made for injury received while riding on truck to place of employ- 
ment in sister State, although claimant was somewhat intoxicated at 
the time of the accident, the injury not being solely due to his 
intoxication. 

The claimant is a plasterer and the employer, Davis Brown, 
Inc., is in the business of plastering. The claimant had prior to 
his last engagement worked several times for this employer in the 
State of New York. It seems that the firm of liegeman & Harris 
had a contract to do some work for the United States government 



390 State Department Repobts 

[Vol. 20] State Industrial Commission 

at Portsmouth, Va., and they sub-contracted the plastering in the 
contract to Davis Brown, Inc. In the early part of February, 
1919, the claimant applied to Davis Brown, Inc., for a job as 
plasterer. He was told that there was work to be had at Ports- 
mouth, Va., and that if he wished to go on the job it would be 
necessary for him to go to the United States Employment Agency 
in the city of New York. He did so and was told that if he 
would go to Portsmouth, Va., he would receive $6.50 per day for 
his services. A card was given him upon which was written, 
H Smoking room, Pennsylvania Station, 5 :30 p. m. tonight." The 
card was dated February 3, 1919, and was signed Wm. J. Coyne. 
Mr. Haworth in pursuance of this contract presented himself at 
the Pennsylvania station with fifteen or twenty other men and 
they were given transportation and arrived at Norfolk, Va., the 
next morning. It seems that they were expected at the Norfolk 
dock when they landed, for the employer had three trucks present 
to take them* by ferry and by truck to the place for work. The 
trucks furnished for their transportation were of the style used 
by the United States Army in transporting munitions. The 
baggage of the men was placed in one truck and the men them- 
selves in two other trucks. The claimant asked permission to 
ride upon the seat with the driver of the truck which carried the 
baggage. The claimant states that the weather was wet and that 
he was soaked with rain and that as a matter of precaution he 
took a drink or two of whiskey and in fact had a bottle partially 
filled with him at the time he was hurt. In addition to this one 
witness testified that after Mr. Haworth was hurt he removed 
another flask of whiskey from his coat pocket. While on the 
way to the place of work, the truck upon which the claimant 
was riding struck a hole in the pavement and Mr. Haworth was 
pitched out of the seat and the truck either ran upon or ran over 
his leg. At all events the injury was so serious that his leg was 
afterward amputated above the knee. 

The questions to be determined are whether the employment 
was had in the State of New York and whether this Commission 
has jurisdiction under the ruling of the Court of Appeals in the 



Hawobth v. Brown, Inc. 391 



State Industrial Commission [Vol. 20] 



ease of Post v. Berger, 216 N. Y. 544, whether the claimant waa 
at the time of hia injury in the course of his employment, that is 
to say, whether he had as yet come under the Compensation Law 
at all, assuming that this Commission has jurisdiction, and lastly, 
whether the claimant's injury was due solely to his intoxication. 

Claimant, in person. 

E. A. Willoughlgr, for insurance carrier. 

Lyon, Commissioner. — This case is quite similar to very many 
other cases which have come before the Commission, of workmen 
engaged to work upon camps or building construction being done 
by private employers for the United States government. The 
process of sending the claimant to the United States government 
employment office for shipment to another State wa3 the method 
used of having employees from the State of New York sent to 
the various munition plants, and seems to have been for the pur- 
pose of safe-guarding the Federal government against the machina- 
tions of alien enemies. 

There is no claim, as I understand it, but that the real employer 
was Davis Brown. Inc., and not the United States government, 
the United States government taking a hand in the employment 
only for the purpose of safe-guarding itself as aforesaid. The 
employer in this case knew perfectly well at the time of Mr. 
Haworth's qualifications as a plasterer. The wages were agreed 
upon and the employer procured his transportation to Portsmouth 
for the purpose of the employment. I am of the opinion 'that 
the employment took place in the State of New York and that 
the claim is to be covered by the decision in the case of Post v. 
Berger, supra. 

The next question to be decided is whether the claimant had 
entered upon his employment at the time when he was injured. 
I think it is not important to determine whether the truck in 
which the claimant was riding was owned by the United States 
government or not. Tt was certainly furnished for his trans- 



392 State Department Reports 



[Vol. 20] State Industrial Commission 



portation to his place of work, and I think this branch of the 
case is covered by the rules which govern where an employer 
furnishes transportation to his injured employee to his place of 
work. The matter was extensively considered by this Commisr 
sion in the case of Kennedy, Lawler & McGrossan ▼. Thompson, 
Starrett Company, reported in volume 2, No. 11, of the Com- 
mission's Bulletin issued in August, 1917, at page 229. 

I think the evidence rather conclusively shows that Mr. Haworth 
was somewhat intoxicated at the time of his accident. I am not 
at all sure that a perfectly sober man would not have retained his 
seat when the truck upon which Mr. Haworth was riding struck 
the hole in the pavement, but that is not the question. We are 
not to decide whether the claimant was guilty of contributory 
negligence in becoming intoxicated, for the statute only debars him 
from compensation in case his injury was due solely to his intoxi- 
cation. I do not think it can be found on the evidence in this 
case that the claimant's injury was due solely to his intoxication. 
I think the fact that the truck struck the hole in the pavement 
was a very serious contributing cause to the claimant's injury. 
For these reasons I think an award should be made for the loss 
of a leg and I so advise. 

Mitchell, Lynch and Perkins, Commissioners, concur; Sayer, 
Commissioner, dissents. 



In the Matter of the Claim of Alton J. Morse, for Compensation 
under the Workmen's Compensation Law, against Willow 
Brook Dairy, Inc., Employer; State Insurance Fund, 
Insurance Carrier 

Case No. 302583 

(Decided April 30, 1910) 

Farm laborer not covered by the Workmen's Compensation Law when injured 
in fixing pipe. 

One whose sole duty is to care for cattle on a farm is not covered by 
the Workmen's Compensation Law when injured in fixing pipe in barn. 



Mohse v. Willow Brook Dairy, Inc. 893 



State Industrial Commission [Vol. 20] 



Lyon, Commissioner. — The employer in this case prepares 
certified milk for the market and in conjunction therewith operates 
a farm where milk from carefully selected and tested cows is 
produced. The claimant's duties were solely those of caring for 
the cattle and producing the milk. He had nothing to do with 
preparing the milk for the market or bottling it. He describes 
the accident as follows : u Fixing pipe in barn, heavy pipe fell 
on hand fracturing 4th finger on right hand." The question is 
whether claimant was covered by the Compensation Law. 

The definition of " employer," subdivision 4 of section 3, pro- 
vides that the term " shall not include farm laborers or domestic 
servants." There can be no question but that claimant was a farm 
laborer and so excluded from the operation of the law (see Cole- 
man v. Bartholomew, 175 App. Div. 122) unless it is governed by 
the case of Clark v. Sherman, affirmed by the Appellate Division 
on May 22, 1918 (184 App. Div. 921). In that case, however, 
the claimant's regular work was in the canning factory and his 
work upon the farm in pulling beans for use in the cannery was 
held to be incident to the hazard of the cannery. Here, however, 
claimant's regular and continuous work was that in which he was 
engaged at the time of his injury, namely, farming, and he is 
expressly excluded from the benefits of the act. If he had been 
regularly employed as a milk bottler, and had been sent, because 
of some emergency, to assist in milking or caring for the cows, 
or to repair the barn, the Clark case might be used as a precedent 
for an award. But his regular work was about the barn and put 
him in the category of farm laborer, the very work in which he 
was injured. An award should be denied because claimant was 
not covered by the Compensation Law. 

Sayer and Mitchell, Commissioners, concur. 



394 Stats Department Kepobts 



[Vol. 20] State Industrial Commission 



In the Matter of the Claim of Louis. Stolhoff, for Compensa- 
tion under the Workmen's Compensation Law, against Louis 
Asch 

Case No. 350183 

(Decided April 30, 1010) 

When failure to give written notice excused — section iS, Workmen's Com- 
pensation Law, amended by chapter 634, Laws of 19x8, in effect May 13, 
19x8. 

Where it is fair to infer that the employer knew of the accident 
happening to his employee, failure to give written notice will be excused 
and an award made. 

Lyon, Commissioner. — The accident happened August 6, 
1918. 

The claim has been disallowed for failure to give the notice in 
writing called for by section 18 of the law. Mr. Asch is the 
employer and had as his foreman M. Goldfeller who hired claim- 
ant for Mr. Asch. It seems that claimant, thinking that Gold- 
feller was the employer, either had begun or was about to begin 
some proceeding against him. 

After the accident, the claimant, Asch and Goldfeller were 
together, and Mr. Asch presented the following and asked claim- 
ant to sign it: 

" New Yokk, N. Y., Aug. 28, 1918 
" Mr. M. Goldfellxb : 

" Sib. — I herewith wish to state that I relieve the above party 
from all obligations as to the claim I made against him in the 
State Industrial Commission or any other claim which will occur 
in the futura" 

This was well within the thirty days which the amendment of 
section 18 fixed as the limit of time within which notice of 
injury must be given. The amendment makes it proper for the 
Commission to excuse the giving of written notice of the injury 
" on the ground that the employer or his agent in charge of tho 
business in the place where the accident occured or having immr- 



Watson v. Estate of Starkb 395 

State Industrial Commission [Vol. 20] 

diate supervision of the employee to whom the accident happened, 
had knowledge of the accident." 

It seems fair to infer that either Goldfeller or Asch, or both 
of them, knew of the accident, the claim for which they were 
asking him to release. 

The decision of the deputy should be reversed, the failure to 
give written notice of the accident excused and an award made 
to date and claimant should be instructed to resume such work 
as he can do. 

On the 30th day of April, 1919, the Commission acted on the 
foregoing matter in accordance with the foregoing opinion* 

Mitchell, Sayer and Perkins, Commissioners, concur. 



In the Matter of the Claim of Rachabl Watsoh, Widow, for 
Compensation under the Workmen's Compensation Law, on 
Account of the Death of Doremus Watson, against Estate 
of Adolph Stabke, Employer; United States Casualty 
Insurance Company, Insurance Carrier 

Death Case No. 375007 

(Decided April 30, 1010) 

When employer not prejudiced by failure of written notice of accident — 
section xS, Workmen's Compensation Law as in effect prior to its amend- 
ment by chapter 634 of the Laws of 1918. 

An agreement for compensation followed by payment of compensation 
to the deceased in his life time is an admission by the employer that 
he was not prejudiced by the failure of the employee to give written 
notice of accident within the time prescribed by section 18 of the Work- 
men's Compensation Law before the amendment taking effect May 13, 
1018. 

Claim for death benefits is made by the widow of Doremus 
Watson growing out of his death on July 29. 1018, as the result, 



896 Stats Department Reports 

[Vol. 20] State Industrial Commission 

as it is claimed, of an accident which happened to him on May 
4, 1918. The accident is thus described: "Was unloading 
spikes and slipped striking shin bone on side of truck." The 
doctor's certificate gives the nature of the injury, as follows: 
" Lower portion of left leg contused, sloughing in a good sized 
area, septic in nature, pus exuding." This certificate was dated 
May 31, 1918. No written notice of the original injury was 
ever given to the employer but oral notice of the injury was 
received by the employer on or before the 17th day of May, 
1918. This we know, because there is in the file a letter from 
the employer to the insurance company, as follows : " Doremus 
Watson, an old colored employee of ours, was working up to 
May 4th, and since then we haven't heard from him. Today, 
his wife called up and said that he had been hurt, unloading 
spikes or irons. She reports that he is still sick up till today. 
We knew nothing of this case whatsoever. This is all that we 
can report." 

Thereafter, and on June 6, 1918, the injured man and his 
employer entered into a written agreement for the payment of 
compensation. The agreement was undoubtedly made at the 
instance of the insurrnce carrier, for it is on one of its blanks, 
the name United States Casualty Company being printed in the 
agreement itself. That the death of the claimant's husband was 
the result of this apparently trifling accident is not seriously 
contested. It seems to be admitted that his physical condition 
was such that the infection resulting from this accident resulted 
fatally. The insurance carrier, however, does resist payment of 
death benefits on the ground that it was prejudiced by the 
failure to give notice of the accident within ten days after it 
occurred. There is no claim but that the employer and insur- 
ance carrier had ample notice of the decedent's death within 
the thirty days called for by section 18 of the Compensation 
Law, but it is strenuously insisted that inasmuch as two portions 
of the sentence providing for notice in section 18, are connected 
by the conjunction <md, it is necessary that the employer should 
have both notice of the injury within the period set forth in 



Watsow v. Estate of Staekb 397 



State Industrial Commission [Vol. 20] 



that section, and also notice of the death within the time set 
forth in that section. At the time when this accident happened, 
the period within which notice in writing of the accident must 
be given to the employer was ten days. 

Maurice F. Miller, for claimant. 

Wm. H. Hotchkiss, for insurance carrier. 

Lyon, Commissioner. — Were it not for the agreement to pay 
compensation to the injured man in his lifetime, the question 
here raised would, in my opinion, be an extremely close ona It 
is true that the law before the amendment of 1918 seems to 
have provided that both notice of the accident within ten days 
and notice of the death within thirty days must be given to the 
employer, and I think it is a very serious question whether the 
failure to give notice of the accident within ten days cannot be 
raised when the claim for death benefits is made, if the case is 
otherwise not complicated. In the present case, however, the 
notice of injury, while not in writing, was given to the employer 
within thirteen days at least after the accident, which is only 
three days beyond the statutory limit and in fact the widow insists 
that* it was given earlier than that. The court has told us that 
in case oral notice of an injury has been given in such wise as 
to incite the attention of the employer and set the insurance 
carrier in motion, that can be held to be evidence of want of 
prejudice. That is exactly what took place in this cdse. The 
oral notice did incite the interest of the employer and his letter 
to the insurance carrier set the insurance carrier in motion. Had 
it been clearly shown that this notice to the employer was within 
the ten days after the accident, it would seem to have been 
sufficient under the court's rulings to warrant the Commission 
in finding that the employer and insurance carrier were not 
prejudiced by failure to give notice in writing. However, com- 
ing shortly after the expiration of the ten days, the question 
arises whether there is anything else in the case which would 



398 Stats Department Reports 

[Vol. 20] State Industrial Gommiasioa 

warrant the Commission in finding that the insurance carrier 
was not prejudiced by the failure to give the notice within the 
ten days. On May thirty-first, the attending physician found that 
the wound was infected and the flesh was sloughing. Seven days 
later, namely, on June sixth, the employer and the injured man, 
at the instance apparently of the insurance carrier, entered into 
a written agreement for the payment of compensation. The 
insurance carrier insists that under the decision of the courts, 
the making of this agreement did not estop the insurance com- 
pany from raising the point that it was prejudiced by failure to 
give the written notice required by section 18 of the law. 

I am inclined to think that this is correct, but in this case I 
do not think it is so much a question of estoppel as it is of an 
admission, perhaps not conclusive, that the employer and insur- 
ance carrier were not prejudiced. I think the payment of com- 
pensation and the agreement to do so after all the facts of the 
case were known to the insurance company is an admission on 
its part that it was not prejudiced by failure of written notice. 
If this be correct, it is not necessary for the Commission in this 
case to decide whether the conjunction and used in section 18 is 
strictly conjunctive in its force and whether in case of an acci- 
dent resulting in death, the parties claiming death benefits must 
show not only that notice of death within thirty days was given, 
but also, in addition to that, that notice of the injury was given 
in writing within ten days after the accident. It is quite pos- 
sible that the insurance carrier's contention in that respect is 
correct, but as already stated, I think in this case, the agreement 
for compensation, followed by payment of compensation in the 
deceased's lifetime, is an admission that no prejudice was due 
to the failure to give the written notice until thirteen days after 
the accident. I, therefore, advise that an award be made to the 
widow for death benefits. 

Sayer and Mitchell, Commissioners, concur. 



Young v. Adams Express Co. 899 



State Industrial Commission [Vol. 20] 



In the Matter of the Claim of Carrie W. Young, Widow, 
for Compensation under the Workmen's Compensation Law, 
on Account of the Death of William J. Young, against 
Adams Express Company, American Railways Express 
Company 

Death Case No. 375987 

(Decided April 30, 1919) 

Pulmonary tuberculosis resulting from injury. 

Deceased died on January 10, 1919, of pulmonary tuberculosis. He 
injured his foot and ankle in the course of his employment on May 14, 
1917, necessitating finally the amputation of his foot. He had suffered 
a severe attack of pleurisy and pneumonia in July, 1915, and it is 
probable that at the time of the accident he had a dormant or latent 
tuberculosis. Evidence examined and held that tuberculosis was lighted 
up and activated by the injury and that the death of decedent was in 
this manner directly connected with the injury which he received. 
Award made. 

This is a claim for death benefits filed by Mrs. Carrie W. 
Young on behalf of herself and seven children, by reason of the 
death of her husband, William J. Young, resulting from an 
accident sustained by him while employed with the Adams 
Express Company. William J. Young died of tuberculosis, and 
the question before the Commission is as to whether his death 
may be traced, with reasonable certainty, to the injury of his foot 

Jeremiah F. Connor and Sidney Masone, for the claimant 

B. A. Smith and J. C. Cochrane, for the employer. 

Sayxr, Commissioner. — William J. Young sustained an injury 
to his foot and ankle while driving a motor truck as an 
employee of the Adams Express Company, on May 14, 1917. 
The injury did not seem to be serious at the time but within a 
couple of months the employer was called upon to furnish' treat- 
ment and did furnish baking and massage treatment. The con- 



400 Stats Department Kepobts 

[Vol.20] State Industrial Commission 

dition did not improve and an X-ray finally developed a diseased 
bone tissue, and finally the foot had to be amputated. On 
September 17, 1918, an award of compensation for 205 weeks for 
the total loss of foot was made and this award was acquiesced 
in by the employer and payments were made in accordance with 
it. On May 31, 1918, the deceased was examined by Dr. Lewy 
of this Department and, in Dr. Lewy'a report, he says : " Exami- 
nation of left foot shows evidence of a marked enlargement of 
the ankle joint ; two round ulcerations with evidence of bone sinus 
in consequence of a tubercular disease of the soft tissues with 
involvement of the ankle joint. Prognosis as to ultimate recovery 
is not good. There is also evidence of a marked tuberculosis of 
both lungs." 

This examination was made by Dr. Lewy in the presence of 
a physician representing the employer. Mr. Young died on 
January 10, 1919, cause of death was certified as " pulmonary 
tuberculosis, duration eighteen months, and contributory chronic 
myocarditis," duration three years. 

It appears that the deceased suffered from a severe attack of 
pleurisy and pneumonia in July, 1915, and was treated from 
the 1st of July until October 8, 1915, for such condition. It 
is the contention of the employer that the pulmonary tubercu- 
losis, from which the deceased died in January, 1919, was a 
sequence of the pleurisy and pneumonia from which he suffered 
in the summer of 1915. We have, however, deceased, following 
his pleurisy and pneumonia, returned to work apparently a well 
man up to the time of the accident to his foot, that he worked 
as best he could for sometime after the accident to his foot, 
that a bone infection set in of a probable tubercular type. 

The principle has been well established by decisions, of the 
Commission that a previously existing latent or dormant tuber- 
culosis may be activated or lighted up by an injury to such an 
extent as to result in an early death of the workman. These 
cases have been held to be compensatable. We have here a case 
of a man who probably had a dormant or latent tuberculosis. 
His history of pleurisy and pneumonia is one that would indi- 



Taub v. Empibs Fibepboof Doob Co. 401 

State Industrial Commission [Vol.20] 

cate tuberculosis. Injury to his foot, with a long period of 
inaction following it, the fact that the foot was immobilized in a 
plaster cast some eight months and the development of the bone 
tuberculosis, all seem to me to argue strongly in favor of the 
contention that his tuberculosis was lighted up and activated by 
his injury and that the death was in this manner directly con- 
nected with his injury. 

I think the case is compensatable and that an award should 
be made to the widow for herself and children and that the 
usual allowance should be made for funeral expenses. 

Lyon and Mitchell, Commissioners, concur. 



In the Matter of the Claim of Israel Taub, Dependent Father, 
and Annie Taub, Dependent Mother, for Compensation under 
the Workmen's Compensation Law on Account of the Death 
of Max Taub, against Empire Fibepboof Doob Company, 
Employer, and Allied Mutuals Liability Insurance Com- 
pany, Insurance Carrier 

Death Case No. 375362 

(Decided May 2, 1919) 

Death caused to employee by boarding freight elevator during lunch hour 
after returning from saloon with pail of beer for lunch — award made. 

Deceased during lunch hour went to a neighboring saloon for a pail of 
beer, returning with it to his place of employment and proceeded to board 
a freight elevator. A short time afterwards he was found lying on the 
elevator, which had ascended, suffering from a fracture of the cervical 
vertebrae, which caused his death. Held, that the injuries were accidental 
and arose out of and in the course of deceased's employment. 

This claim came on for hearing before the State Industrial 

Commission at its office, 230 Fifth avenue, New York city, on 
State Deft. Kept. — Vol. 20 26 



40$ State Department Reports 



IToL 20] State Industrial Commiaaion 



October 28, 1918, November 11, 1918, November 25, 1918, 
December 9, 1918, January 29, 1919, and May 2, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Arthur Butler Graham, attorney for employer and insurance 
carrier. 

Jacob Poss, attorney for claimants. 

By the Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Com- 
mission makes it conclusions . of fact, . award and decision as 
follows : 

On September 3, 1918, the day on which Max Taub sustained 
the injuries which resulted in his death on September 18, 1918, 
he resided at 547 Fox street, New York city, and was employed 
as a carpenter by the Empire Fireproof Door Company, with 
principal offices and place of business at No. 435 Southern boule- 
vard, New York city, said company being engaged in the manu- 
facture of fireproof doors. 

On September 3, 1918, Max Taub was engaged in the regular 
course of his employment on the second floor at 209 West Forty- 
eighth street, New York city, which premises were being reno- 
vated. At 12 o'clock noon he quit work for his luncheon hour 
and went to a saloon a short distance away, and after having 
bought a pail of beer returned with it to the premises at which 
he was working for the purpose of eating his lunch and proceeded 
to board a freight elevator. A short time thereafter he was 
found lying on the said elevator, which had ascended to a point 
between the first and second floors of the said building, with the 
floor of the said elevator below the ceiling of the first floor. 
When found he was suffering from a fracture of the cervical 
vertebra?, which caused his death on September 18, 1918, and 
which injury he sustained upon the premises at which he was 
employed and on which he was about to eat his luncheon. 

The average weekly wage of Max Taub was the sum of twenty- 
three dollars and eight cents. 



Taub v. Empire Fireproof Door Co. 403 

State Industrial Commission [Vol. 20] 

The injuries which resulted in the death of Max Taub were 
accidental injuries and arose out of and in the course of his 
employment. 

Due notice of death was given to the employer. 

Max Taub left him surviving Bessie Taub, widow (who has 
elected to sue a third party and has filed an election to sue, 
CNY-74) ; Israel Taub, father, aged sixty-five years, dependent 
upon him at the time of said accident, and Annie Taub, mother, 
aged fifty-five years, dependent upon him at the time of said 
accident, the claimants herein. 

Award of compensation is hereby made against Empire Fire- 
proof Door Company, employer, and Allied Mutuals Liability 
Insurance Company, insurance carrier, to the dependent father 
and to the dependent mother of Max Taub, deceased, as follows: 
To Israel Taub, dependent father, aged sixty-five years, at the 
rate of four dollars and twenty-three cents weekly, during de- 
pendency, and to Annie Taub, dependent mother, aged fifty-five 
years, at the rate of four dollars and twenty-three cents weekly 
during dependency. 

Present payment pursuant to said award is due and payable 
in the sum of $169.20 for twenty weeks covering period from 
September 18, 1918, to January 29, 1919. Future payments, 
pursuant to said award, in the sum of $16.92, are to be made 
every two weeks beginning on January 29, 1919, during the 
time set forth in the preceding paragraph. 

Out of the present payment the sum of $100 is to be paid 
directly to Jacob Poss, attorney for claimants. 

Bessie Taub, widow, has elected to sue a third party and has 
filed an election to sua 



404 State Department Reports 



[Vol.20] State Industrial Commission 

I — — " 



In the Matter of the Claim of Augustino Lemmo, for Compensa- 
tion under the Workmen's Compensation Law, against John 
L. Hates Construction Company, Employer 

Case No. 4619-A 

In the Matter of the Claim of Vinbt Hamilton, for Compensa- 
tion under the Workmen's Compensation Law on Account of 
the Death of Marshall Hamilton, against John L. Hayes 
Construction Company, Employer, and London Guarantee 
and Accident Insurance Company, Insurance Carrier 

Claim No. 4300-A 

(Decided May 13, 1919) 



Insuranoe — " deposit premium " policy — power of Commission — when policy 
deemed renewed — when termination of insurance agency does not affect 



i 
i 
i 

the relations between the insured and the insurer. 



Augustino Lemmo was injured on March 28, 191$, and Marshall 
Hamilton was killed on June 8, 1918. The employer, a road construction 
company, took out a "deposit premium" policy with the insurance 
carrier relying on the statement of the agent that the policy would be 
renewed as long as a deposit was maintained and as long as the contract- 
ing oompany was on the job and wanted the policy continued and until 
it notified the insurance company otherwise. The first policy expired 
March 28, 1917. The renewal policy was issued expiring April 11, 1918. 
(Sometime subsequent to April 11, 1918, a pay roll auditor of the insur- 
ance company in auditing the pay rolls assured a representative of the 
employer that the policy would be renewed and that the company was 
entirely protected. At the time of the expiration of the policy the insur- 
ance company had in its possession standing to the credit of the construc- 
tion company an amount in excess of $1,000, no effort to return which 
was made until after the accidents. An officer of the insurance company 
testified that the policy was not renewed because the agency of the general 
agent who negotiated the policy in the first instance had not been renewed. 
Held, that the termination of the agency of the general agent who 
negotiated the policy did not affect the relations between the construc- 
tion company and the insurance company; that if the insurance company 
desired to cancel the risk it could have done so in the manner provided 
by the policy and by the law, in which case it was bound to return the 
proportion of the $1,000 deposit which had not been earned at the date 
of cancellation. At the expiration of the second policy it could not 
refuse to issue a new policy and at the same time keep the money. The 



Lemmo t>. Hayes Construction Co. 405 

^^ii_ .. ■ - - 

State Industrial Commission [Vol. 20] 

insurance company was under a moral obligation and, on all the facts 
presented, a legal obligation to give notice to the construction company 
that it would not renew the policy. Held, further, that the Commission 
has power to determine the issue and finds that a valid contract of 
insurance was in fact in force between the insurance company and the 
employer and makes an award against the insurance carrier in both cases. 

These are two claims against the John L. Hayes Construction 
Company, as employer, and the London Guarantee and Accident 
Insurance Company, as insurance carrier. The issue is iden- 
tical as to each of them and the two cases will be discussed as 
one. No issue is raised as to the accident in either case nor as to 
the fact that the claimants are entitled to compensation. The 
only issue is as to whether the award should be against the John 
L. Hayes Construction Company as an uninsured employer, or 
whether the award should be against the London Guarantee and 
Accident Insurance Company as the insurance carrier of the 
Hayes Company. The facts so far as material will appear in 
the opinion. 

I. J. Beaudrias, for the employer. 

C. S. Gray, for the insurance carrier. 

Sayeb, Commissioner. — The John L. Hayes Construction Com- 
pany obtained a contract to build a public highway between cer- 
tain points on the Hudson river over or around the mountain 
known as Storm King. This contract was entered into in 1916. 
John L. Hayes, president of the company, testifies that he was 
approached by one Thomas Torpy and solicited for his insur- 
ance business. He testifies that Torpy informed him that his 
company, the London Guarantee and Accident Insurance Com- 
pany, was issuing a form of policy for construction work that 
did not require the advance payment of the full premium but 
called for the payment of what is known as a deposit premium. 
Hayes further testifies that Torpy told him that all that would 
be necessary would be for him to pay $1,000 on account of com- 
pensation insurance premium and $250 on account of premium 
on the so-called public liability insurance policy, and this insur- 



406 State Department Reports 



[Vol.20] State Industrial Commission 

anoe company would render quarterly bills for the earned premium 
when ascertained by audits of the payroll. Hayes testified that 
Torpy made a statement to him as follows: "Now while that 
seems hard that is a protection to you as well as to the Company. 
At all times you are protected with insurance if you have a 
deposit up, so that they will renew your policies as long as you 
are on that job, as long as your policies are there and you want 
them continued, unless you want to notify them otherwise." 

This testimony is corroborated by Torpy himself who, under 
oath, stated that the version of the conversation given by Hayes 
was correct. Torpy was a general agent of the London Guarantee 
and Accident Insurance Company and had been designated as such 
by the company in a designation filed with the State Superin- 
tendent of Insurance. Torpy's representation to Hayes, therefore, 
was that if Hayes paid on account of compensation insurance a 
deposit premium of $1,000 and paid his quarterly bills for the 
earned premium he would be at all times protected and that the 
insurance policies would be automatically renewed. This repre- 
sentation of Torpy, if acted upon by Hayes, was certainly binding 
upon the company and the more so if the company by word or act 
ratified Torpy's representation. It is important, therefore, to 
consider what ratification, if any, there was of Torpy's repre- 
sentation. Hayes gave his check to the company for $1,250, 
$1,000 on account of compensation insurance and $250 being 
premium upon his public liability policy. Thereupon, two 
policies were issued by the London Guarantee and Accident Insur- 
ance Company to John L. Hayes Construction Company, one 
covering the public liability and the other covering the workmen's 
compensation liability. We need not further concern ourselves 
with the public liability policy. The compensation policy was 
issued to run from March 28, 1916, to March 28, 1917. The 
policy was the standard form employers' liability and workmen's 
compensation policy. It was modified to a certain extent, how- 
ever, from the usual form, and the clause in the policy which 
states what the estimated advance premium was to be has the 
word " deposit " typewritten in as an insert between the words 



Limmo v, Hayks Constbuction Co. 407 

State Industrial Commission [Vol. 20] 

" advance " and " premium " so as to read " estimated advance 
deposit premium $1,000," and then had attached to it a rider 
providing that the assured was to submit a written statement of 
employees, etc., and agreeing to pay the premium computed thereon 
at the end of each three months' period, the deposit premium 
to apply against the earned premium for the final three months' 
period. From this fact Hayes was justified in accepting Torpy' s 
statement with regard to the arrangement of a deposit premium 
and quarterly audits and bills for earned premium. This policy 
expired in accordance with the terms thereof on March 28, 1917. 
In due course of business and without request Hayes received from 
the company a renewal policy, which was issued to run from April 
11, 1917, to April 11, 1918. On this policy the words " estimated 
advance premium " were stricken out and made to read " deposit 
premium $1,000." At or about this time the company sent Hayes 
a bill for an additional $1,000 deposit premium. Hayes testifies 
that he asked Torpy about this and Torpy said he could not under- 
stand it but the easiest thing to do was to pay it and adjust it 
later. Thereupon Hayes paid the additional $1,000 deposit 
premium. Under the terms of this policy it was to expire at mid- 
night April 11, 1918. Sometime subsequent to April 11, 1918. a 
payroll auditor of the insurance company went to the Hayes' job 
to audit the payrolls and requested the payrolls up to and 
including April eleventh. When asked an explanation of the 
reason for taking the payrolls as of April eleventh he explained 
that was the expiration of the policy period. Upon the repre- 
sentative of the Hayes Company expressing concern as to whether 
their insurance had expired he was assured by the auditor that of 
course the policy would be renewed and that they were entirely 
protected. While the statement of the auditor may not have any 
weight as an agreement by the company to issue a renewal policy, 
it may be fair to take it into account when we consider the whole 
course of the insurance company in permitting Hayes to be lured 
into a sense of security and to sleep upon his rights. Augustino 
Lemmo was injured on May 28, 1918, and Marshall Hamilton was 
killed on June 8, 1918. Not until the insurance company refused 



408 State Department Reports 



[Vol.20] State Industrial Commission 



to accept liability for these accidents, when notice was given to 
them, did Hayes become aware of the fact that he was not insured. 
No renewal policy had been issued on or subsequent to April 
eleventh. 

At the time of the expiration of the policy the London Guarantee 
and Accident Insurance Company had in its possession, standing 
to the credit of the John L. Hayes Construction Company, an 
amount considerably in excess of $1,000 over and above the 
liabilities of the Hayes Company to the insurance carrier. No 
effort was made by the company to return this balance to Hayes 
until after the accidents in these cases. 

The officer of the insurance company who appeared before me 
testified that the company did not renew the policy on April 
eleventh because of the fact that in the meantime Mr. Torpy's 
general agency had expired and had not been renewed. 

If Mr. Torpy, as general agent for the company, made an agree- 
ment with Hayes that the company would renew its policy so long 
as Hayes kept the $1,000 on deposit and followed up that agree- 
ment by one automatic renewal, then the fact that Torpy's general 
agency ceased at some subsequent date could not affect the relation 
between the Hayes Company and the insurance company. If the 
insurance company desired to cancel the risk it could do so at any 
time during the policy period by complying with the conditions 
of the policy and the provisions of the law in regard thereto. This 
it did not do. In case of cancellation it would be bound to return 
the proportion of the $1,000 deposit which had not been earned 
at the date of cancellation. At the expiration of the second policy 
it could not refuse to issue a new policy and, at the same time, 
continue to hold the money of the Hayes Company. It was bound 
to make an accounting of such moneys and was certainly under a 
moral obligation and I think on all the f act3 presented under a 
legal obligation to give notice to the Hayes Company that it would 
not renew the policy as Torpy had agreed. 

Some question has been raised as to the power of the Commis- 
sion to determine the issue as to whether, on the dates of the 
accidents out of which these claims arose, there was in existence 



Lbmmo I?. Hayes Construction Co. 409 

State Industrial Commission [Vol. 20] 

a contract of insurance between the Hayes Company and the 
London Guarantee Company. I think that question has been 
settled by the Court of Appeals in Matter of Skoczlois v. Vinocour, 
221 N. Y. 276. In that case, discussing the question of the Com- 
mission's power to pass upon the rights of the insurance carrier, 
Judge McLaughlin for the court said: "I think the insurance 
company can raise and have the question determined as to whether 
there were then a valid outstanding policy issued by it. If such 
questions be raised, then the determination of them lies with the 
commi8sion. ,, The court proceeds to quote subdivision 2, section 
54 of the Workmen's Compensation Law, which provides that 
jurisdiction of the employer shall, for the purpose of the Com- 
pensation Law, be jurisdiction of the insurance carrier, " and that 
the insurance carrier shall in all things be bound by and subject 
to the orders, findings, decisions or awards rendered against the 
employer for the payment of compensation under the provisions 
of this chapter/' See also Matter of O'Shaughnessy v. Empire 
Construction Co., 186 App. Div. 927. 

In the O'Shaughnessy case above referred to no " policy " was 
issued by the insurance company. The only evidence of the con- 
tract of insurance was a binder issued by the company and the 
oral testimony in regard to the agreement between the insurance 
company and the employer. The Commission had to interpret 
that contract of insurance and determine upon all the evidence 
that the insurance company was at the time of the accident in that 
case the insurance carrier of the employer. In similar manner 
I think we may here, although no policy was actually issued 
covering this immediate period of time, find that job in accord- 
ance with the agreement made by its agent, Torpy, and the carry- 
ing out by the Hayes Company of all the conditions on its part 
to be performed. 

It may be urged that the proper course in this case would be to 
make the award against the employer company and that the 
employer company would have recourse to a suit against the 
London Company for whatever damages the Hayes Company 
sustained by reason of the failure of the London Company to issue 



410 State Department Reports 

[Vol.20] State Industrial Commission 

a policy as agreed. To so hold, however, would be to have more 
regard for the form than for the substance. If the London Com- 
pany is, as I believe it to be, equitably bound to save the Hayes 
Company from any and all awards under the Compensation Law 
made against it, then I believe we should find that a valid contract 
of insurance was, in fact, in force between the London Guarantee 
and Accident Insurance Company and the John L. Hayes Con- 
struction Company and make an award against the London. Com- 
pany as such insurance carrier. 

An award is accordingly made in each of the above named cases 
against the John L. Hayes Construction Company as an employer 
and against the London Guarantee and Accident Insurance Com- 
pany as insurance carrier. 

Lyon, Lynch, Perkins and Mitchell, Commissioners, concur. 



In the Matter of the Claim of Waclaw Stbuztoki, for Compen- 
sation under Workmen's Compensation Law, against R. W. 
Smith Contracting Company, Employer; United States 
Fidelity and Guaranty Company, Insurance Carrier 

Case No. 73519 

(Decided May IS, 1919) 

The amendment to section 18 of the Workmen's Compensation Law by 
chapter 634 of the Laws of 1918 is retroactive. 

Claimant was injured May 7, 1918. The .amendment to section 18 of 
the Workmen's Compensation Law by chapter 034. of the Laws of 19 IS 
became effective May 13, 1918, and extended the time of giving notice 
until thirty days after the accident and also provided that the failure to 
give notice might be excused "on the ground that the employer, or his 
or its agents in charge of the business in the place where the accident 
occurred or having immediate supervision of the employee to whom the 
accident happened, had knowledge of the accident." The evidence shows 
that although the employer did not receive written notice its foreman 
was informed orally within ten days after the accident that the claimant 
was injured. If the accident had occurred after May 13, 1918, claimant's 



Stbuztcki v. Smith Contracting Co. 411 

State Industrial Commission [Vol. 20] 

oral notice to the foreman would have been sufficient to excuse failure 
to give written notice. Held, that as the amendment only affects the 
remedy it comes within the general rule that changes in the law affecting 
the remedy have retroactive operation. Therefore, the failure to give 
written notice of the accident is excused and an award made. 

This is a claim for compensation duo to an injury to claimant's 
eye. The testimony in the case is most unsatisfactory both on 
the question of an accident and on the question of notice to the 
employer. The claimant was engaged to work for the R. W. 
Smith Contracting Company in repairing a garage at Bridge- . 
hampton for the Standard Oil Company. The garage had an old 
concrete floor and the claimant with others under the supervision 
of Mr. Carroll, the foreman, was breaking up this concrete floor 
with a sledge and chisel when, as he states, a chip from the con- 
crete flew into his eye causing him a serious injury. 

No written notice of the accident was ever given to the employer 
and the employer's witnesses disclaim any notice of an accident 
until several months afterward, and indeed until some lawyer 
wrote demanding compensation. At the time when the accident 
happened on May 7, 1918, section 18 of the Compensation Law 
called for written notice of the accident within ten days after 
disability and made it possible for the Commission to excuse 
the giving of notice only on proof that the insurance carrier and 
employer were not prejudiced by failure to give the notice. This 
chapter was amended by chapter 634 of the Laws of 1918, which 
became effective May 13, 1918, extending the time for giving 
notice until thirty days after the accident, and also provided 
among other things that the failure to give notice might be excused 
" on the ground that the employer, or his or its agents in charge 
of the business in the place where the accident occurred or having 
immediate supervision of the employee to whom the accident 
happened, had knowledge of the accident, * * *." 

The questions to be determined are whether the accident 
happened as alleged by the claimant, whether the amendment to 
section 18 of the law is retroactive so as to operate upon this claim, 
and whether the agent or superintendent of the employer had 
actual knowledge of the accident. 



412 State Department Repoetb 



[Vol. 20] State Industrial Commission 



Eugene R Haynes, for claimant. 

W. W. Dimmick and W. E. Burchell, for insurance carrier. 

Lyon, Commissioner. — I think on all the proofs in the case, 
and they are quite voluminous, there isn't much doubt but that 
the claimant received an injury to his eye. There is considerable 
proof in the case that the claimant's eyes were diseased before 
the accident, but there is no proof but that he had sufficient 
vision with which to do the ordinary work of a common laborer. 
The claimant and two or three other witnesses testified positively 
to the fact that a piece of concrete entered his eye and that the 
claimant immediately made an outcry and showed his eye to 
different people. On all the testimony I think it must be found 
that the claimant sustained an injury to his eye. On the ques- 
tion of notice there is a good deal of dispute. The claimant and 
at least two other witnesses testified that immediately upon the 
happening of the accident, Mr. Carroll, the foreman of the job, 
had his attention called to it and that he examined the claimant's 
eye at the claimant's request, but found nothing in it. Mr. 
Carroll denies this and states that he knew nothing about the 
accident. However, there came a time shortly afterward when 
the claimant wished to secure a doctor for his eye and, not being 
able to speak the English language, he procured another work- 
man to go with him to Mr. Carroll to see about a physician. Mr. 
Carroll was called to the stand and testified as follows: " I saw 
his eye bandaged with a white handkerchief and this fellow told 
me his eye was hurted, and I says, ' Too bad ;' sympathized with 
the man and then he came over and asked me if he could go to the 
hospital with him. I says, * You can go on your own time if you 
want.' * * * Q. Mr. Carroll, how long after May 7, 1918, 
was it that you saw this man at the station and told him if he 
wanted to go to a doctor one of the men could go with him ? A. It 
was fully a week after he left me. Q. Fully a week? 
A. After he left me. He left me on Thursday night. 
Friday was pay-day — Saturday was pay-day and Friday 
he stopped. I thought he would be out the next day. 



Struzycki v. Smith Contracting Co. 413 



State Industrial Commission [Vol. 20] 



It was in the middle of the week I met him and went over to 
see him, probably Wednesday or Thursday." 

If the claimant stopped work or left on Thursday the prob- 
ability is that his accident happened on Wednesday, for he seems 
to have been unable to work after the accident. Mr. Carroll, 
therefore, was informed within ten days after the accident at 
least that the claimant claimed to have had his eye hurt. If 
the accident had occurred after May thirteenth, when the amend- 
ment to section 18 took effect, his oral notice of the injury to 
Mr. Carroll would have been sufficient to excuse the failure to 
give written notice of the injury. The question, therefore, is 
whether the amendment to the statute which took effect on May 
thirteenth, six days after the accident and before the complete 
running of the ten days provided in the old law, was sufficient 
to make it possible for the Commission to excuse the giving of 
written notice. In other words, is the amendment to section 18 
retroactive in its effect. I confess to have considerable doubt 
about the matter, because on the face of the situation it looks to me 
as though the rights of the parties were fixed before the amend- 
ment to the statute went into effect. However, we asked the 
opinion of our counsel on the matter and he has given us his 
view in the following words : " The amendment only affects the 
remedy and I think this amendment comes within the general 
rule that changes in the law affecting the remedy have retroactive 
operation," 

Mr. Bonynge is a lawyer of much experience and learning, 
and I am disposed to accept his views upon the law for our pur- 
poses. I think, therefore, an award should be made and the 
failure to give written notice to the employer of the injury should 
be excused. 

The extent of claimant's injury is very hard to determine 
from any testimony in the case. The doctor to whom he first 
went for treatment states that the injury consisted of a lacera- 
tion of the cornea of the left eye, but I think there is sufficient 
in the evidence to show that he has lost a considerable portion 
of the vision of the eye, at least as much as a quarter. I think 



414 State Department Reports 

[VoL20] State Industrial Commission 

an award should be made for thirty-two weeks' compensation 
and the case continued for determination as to the exact propor- 
tion of the eye lost. 

On the 13th day of May, 1919, the Commission acted upon 
the foregoing matter in accordance with the foregoing opinion. 

Perkins, Sayer, Lynch and Mitchell, Commissioners, concur. 



In the Matter of the Claim of Minnie Conant, Widow, for 
Compensation under the Workmen's Compensation Law, on 
Account of the Death of Lewis Conant, against Thomas 
Monk, Jr., Uninsured 

Case No. 85219 

(Decided May 13, 1919) 

Place of hiring — act of agent in sister State confirmed — when Workmen's 
Compensation Law covers accident in another State. 

Deceased, a resident of New York, met his death by falling from a 
barge at Bridgeport, Conn. The owner of the barge was a resident of the 
State of New York and the barge was registered from that port. De- 
ceased while in New Jersey was hired as captain of the barge by the 
employer's agent there, the barge at the time being at Stamford, Conn. 
The evidence shows that the agent in New Jersey communicated by 
telephone with the owner in New York about the hiring and was told 
by the owner to use his own judgment. The agent thereupon hired the 
deceased and notified the owner who told him over the telephone, " Well, 
if you got him, go right on to Stamford." Held, that the hiring was not 
complete until confirmed by the owner in New York which was done; 
that the employment related to New York where the employer lived and 
carried on his business and the fact that the employment extended into 
other States was merely incidental to the New York business. Award 
made, 

This is a claim for death benefits by the widow of Lewis 
Conant, on account of his death by drowning while employed 
on a barge belonging to Thomas Monk, Jr., and lying at Bridge- 
port, Conn., at the time. It is alleged the place of employment 



Coitakt v. Monk 416 



Stats Industrial Commission [Vol. 20] 



was in the State of New Jersey, and that, therefore, the Com- 
mission is without jurisdiction to make an award. 

William C. Relyea, for the claimant. 

Beekman, Menken ft Griscom (Edward K. Hanlon, of coun- 
sel), for the employer. 

Satxb, Commissioner. — Thomas Monk, Jr., was the owner of 
a certain barge named Monk that was used for conveying freight 
between various points, in the State of New Jersey, the State 
of New York and the State of Connecticut. The owner was a 
resident of New York and had his principal office or place of 
business in New York. The barge Monk was a vessel of New York 
State and was registered at the Custom House in New York 
city. Conant, the barge captain, was killed by falling from the 
boat into the water at Bridgeport, Conn. 

Conant it seems was a resident of New York, although for 
nearly a year he had lived on the boat. His wife, however, for 
a time after this employment began continued to reside in New 
York 

On June 19, 1917, Conant was hired by Monk to act as 
captain of his barge. At the time of the hiring Conant was in 
New Jersey, Monk was in New York, and the boat on which 
Conant was to be employed was at Stamford, Conn. Conant was 
hired through the medium of one Perry, who was an agent of 
Monk. He testified that he telephoned from Jersey City, N. J., 
to Monk at his office in New York, that he had found a suitable 
man to employ as captain of the barge. Monk authorized Perry 
to use his own judgment in the matter. Perry then had a con- 
versation with Conant and as he expresses it " hired him." He 
then testified that he went back, called up Monk and told him 
and that Monk said " ' Well/ he says, ' if you got him, go right on 
to Stamford '." 

It is clear to me that Perry acted merely as agent for Monk, 
and that the hiring was not complete until Monk confirmed 
Perry's act. Monk was in New York. The employment related 
to New York, where the employer lived and carried on his busi 



416 State Department Reports 

[Vol.20] State Industrial Commission 

ness affairs, and the fact that the employment extended into 
other States was merely incidental to the New York business. 

There is some hearsay evidence to the effect that before going 
to Connecticut Conant called at Monk's office and the hiring was 
there consummated. I do not think, however, on that evidence 
we can find that Conant did, in fact, go to Monk's office. 

It has been urged that under authority of the case of Post v. 
Burger, 216 N. Y. 544, the place of hiring is the sole criterion 
of whether an employment comes under our law. The Post case 
did not decide any such thing in my judgment. The question 
before the Court of Appeals there was whether in that case a 
man hired in New York, in connection with a New York employ- 
ment, who was injured in New Jersey was under the New York 
law. The court held that he was. I do not believe the court 
intended to hold and did not hold that a New York man, hired 
outside of New York to work in New York or in connection 
with a New York employment, was thereby debarred from the 
benefits of the New York law. Such a ruling would make eva- 
sions of the law most easy and defeat the very beneficial pro- 
visions intended to be secured by it. A New York employer 
might make a practice of hiring his workmen in New Jersey, 
and, notwithstanding the fact that the workman might reside in 
New York, that his family might, in case of accident, become 
a public charge upon New York, and that the employment was 
a hazardous employment actually carried on in New York, 
escape responsibility under the New York law. I do not believe 
that to be the law nor that it was ever intended by the Legislature 
to be the law. 

But this case has another aspect, which has not been presented 
by the counsel on either side. Conant was employed to work on 
a boat and the contract of hiring was maritime in its nature. 
The hiring, which it is alleged took place in New Jersey, was in 
June, 1917. At that time maritime employments were not under 
the New York Compensation Law, and jurisdiction in such matters 
was solely in admiralty. Jensen v. Southern Pac. Co., 224 
U. S. 205. 



Conant v. Monk .417 



State Industrial Commission [Vol. 20] 

In October 1917, the Congress amended the Federal Judiciary 
Code so as to reserve to claimants their rights and remedies under 
Workmen's Compensation Laws. Following this grant of juris- 
diction by Congress, the New York State Legislature reenacted 
group 8 of section 2 of the Compensation Law. By that enact- 
ment, on April 17, 1918, all maritime employments in New York 
came under the jurisdiction of the New York Compensation Law. 
In this respect maritime employments came under the law in 
the same manner as did all other hazardous employments in New 
York when the Compensation Law first went into effect. In the 
case of Smith v. Heine Safety Boiler Co., 224 N. Y. 9, the Court 
of Appeals pointed out that the contract of employment was made 
before the Compensation Law was enacted, and that the fact of 
hiring in New York before the Compensation Law took effect 
did not affect the character of the employment in another State, 
where that employment was carried on by a foreign corporation 
that did no business in New York. By the same reasoning, the 
hiring of Conant in New Jersey (if it in fact did take place there) 
by a New York employer, at a time when the New York law did 
not apply to his employment, would not affect the character of 
the employment at the time the law was enacted as to maritime 
workers. When that later provision of law was enacted, Conant, 
a New York citizen, was in the employ of a New York employer, 
in work carried on in New York and incidentally thereto in other 
States, and the New York law automatically became then and 
there an integral part of his contract of employment. I think, 
therefore, that the objection to the Commission's jurisdiction 
should be overruled. 

Although it appears that the claimant may not have given writ- 
ten notice of the death, the employer had knowledge, and sent a 
representative to arrange for the burial. He was, therefore, 
not prejudiced. 

There is also some evidence that the employer obtained from 

this claimant a general release upon the payment of a few dollar*. 

Such release does not bar the Compensation Law and is of no 
Statb Dkpt. Rkpt.— Vol. 20 27 



418 State Department Repobts 

[Vol.20] State Industrial Commission 

effect. The employer, however, may be credited with any amounts 
he may have paid to the widow. 
Let an award be made. 

On the 13th day of May, 1919, the Commission acted upon the 
foregoing matter in accordance with the foregoing opinion. 

Lyon, Perkins, Lynch and Mitchell, Commissioners, concur. 



In the Matter of the Claim of Guiseppe Buteea, for Compensa- 
tion under the Workmen's Compensation Law against Mosse 
Dry Dock and Repair Company, Employer and Self-Insurer 

Case No. 201309 

(Decided May 13, 1919) 

Presumptions under section ai, Workmen's Compensation Law. 

The presumptions under section 21 of the Workmen's Compensation 
Law are sufficient in a close case or an evenly balanced case to turn the 
scale in favor of the employee. Where there is no substantial evidence 
to overcome the presumption an award will be made. 

On December 27, 1918, the claimant was injured by a foreign 
body entering his eye and went to the hospital of the employer 
where the attendant with a swab tried to remove it. She was 
unsuccessful in removing the body and the claimant was there- 
upon sent to Dr. Simmons on the twenty-eighth of December. 
He removed a piece of steel which had stuck in the cornea. Claim- 
ant had before had some trouble with his eve but it was not 
serious and the vision was useful. His sight in this eye is now 
reduced to one-quarter. 

Fullerton Wells, for claimant. 

Edgar R. Mead, for employer. 

Lyon, Commissioner. — The doctors are, as is not unusual in 
many of these eye cases, in disagreement as to the causal rela- 
tion between the injury and the present loss of vision in claimant's 
oye. There is, however, no question but that there waa an aeci- 



Doshbt v. Fiei Companies Building Cobp. 419 

State Industrial Commission [Vol.20] 

dent resulting in a piece of steel entering the claimant's eye with 
sufficient force to imbed itself in the cornea so deep that is could 
not be removed without the aid of an expert physician. There is 
no denial but that three-quarters of the vision of this eye is now 
gone, nor is there any substantial denial of the fact that the claim- 
ant before this accident had vision in this eye which was per- 
fectly useful for practical purposes. Given the accident and the 
loss of vision immediately following, I do not quite see how we 
could deny an award in this case even in the absence of the pre- 
sumptions raised by section 21 of the law. 

The employer claims that the presumptions raised by this sec- 
tion are limited to the fact that the accident arose in the course 
of his employment and that his work was hazardous but I think 
this is too limited a view to take of that section. I think the 
presumptions of section 21 are sufficient in a close case or an 
evenly balanced case, to turn the scale in favor of the employee. 
I am also of the opinion that there is no substantial evidence to 
overcome the presumption and that an award must therefore be 
made for the loss of three-fourths of the vision, of this eye. 

On the 13th day of May, 1919, the Commission acted upon the 
foregoing matter in accordance with the foregoing opinion. 

Mitchell and Sayer, Commissioners, concur. 



In the Matter of the Claim of Joseph Doshet, for Compensation 
under the Workmen's Compensation Law against Fire Com- 
panies Building Corporation, Employer; United States 
Casualty Compact*, Insurance Carrier 

Case No. 326087 

(Decided May 13, 1919) 

of the face (BelTs palsy) caused by excessive draft of cold air — 
industrial accident 

Claimant, a night watchman, while attempting to turn off the hydraulic 
apparatus which operated an elevator was struck in the face by a forcible 



420 State Department Reports 



[Vol. 20] State Industrial Commission 



jet of water from a bursted pipe. He was thoroughly drenched. The 
accident happened in the morning. He changed his clothes, went home 
and spent the day in bed as was his custom and returned to work about 
6 P. m., and by direction of his superior assisted in repairing the cable 
of the elevator, working in a very cold draft. Within a few hours he 
was taken with paralysis of the face, generally known as Bell's palsy, 
incapacitating him for several months. Bell's palsy may be caused by a 
sharp blow or by a draft of cold air. Held, that the paralysis was 
brought on by an excessive draft of cold air and that it was an industrial 
accident within the meaning of the Compensation Law. 

This case has had an unusual experience. It seems the claimant 
was working for his employer about an elevator on the 18th day of 
November, 1918. In the morning of that day there was some 
difficulty with the hydraulic apparatus which operated the ele- 
vator; the water pipe burst and Mr. Doshey, who was attempting 
to turn off the water, was struck in the face by a forcible jet of . 
water which went to the ceiling over his head and came down 
thoroughly drenching him. 

He was a night watchman and this happened just before he was 
leaving for his home in the morning. He immediately changed 
his clothes and went home and appears to have spent most of the 
day in bed as his custom was. On returning to his post of duty at 
about six o'clock at night he was directed by his superior to assist 
in repairing the cable to the elevator, and while doing so, worked in 
a very cold draft. Within a few hours afterward he was taken, 
with paralysis of the face, generally known as Bell's palsy, which 
incapacitated him for work for several months. When the case 
came on for hearing before the deputy commissioner, Mr. Doshey 
attributed his paralysis to the working in the draft and made no 
mention of the bursting of the water pipe. The deputy commis- 
sioner decided that the paralysis resulting from the draft of cold 
air was not an accident and dismissed the claim. Thereafter, on 
the claimant's application a rehearing was had before the deputy, 
when for the first time the claimant recited the incident relative 
to the bursting of the pipe and being wet with water. The deputy 
thereupon set aside the former decision dismissing the claim and 
made an award for the claimant's disability growing oat of the 
incident of the bursting of the water pipe. 



Doshey v. Fibs Companies Building Corp. 421 

State Industrial Commission [Vol. 20] 

The case now comes before the full Commission for review to 
determine whether the award as last made can stand, and if so, on 
which theory of the case. 

Claimant in person. 

Wm. H. Hotchkiss, for insurance carrier. 

Lyon, Commissioner. — There is considerable colloquy in the 
record looking toward the clearing up of the discrepancy in the 
claimant's testimony on the occasion of the two different hearings. 
The insurance carrier raised the point that claimant coming before 
the Commission with one story of his injury and proving unsuc- 
cessful on that theory of the case, ought not to be heard to allege 
an entirely different occurrence and succeed in securing an award. 
This, I suppose* would be perfectly true if there was anything in 
the record to show that the claimant was untruthful with reference 
to either one of his claims. Had the claimant attempted to prove 
his claim on the theory of a disability growing out of the draft of 
air striking him and then when unsuccessful had appeared before 
the Commission with a story of a different accident which was at 
all impeached, it would, in my opinion, be almost necessary for 
the Commission to deny an award, but on careful examination of 
this case, it appears that that is not the situation at all. It is 
admitted by the insurance carrier that both of the occurrences 
narrated by the claimant actually happened, that is to say, the 
claimant did get a very severe wetting in the morning and he did 
work in a very severe cold draft in the afternoon and the claimant 
is not particularly at fault because he did not know which of 
these two occurrences caused his disability. 

It seems that Bell's palsy, or paralysis of the face, may be caused 
either by a sharp blow or by a draft of cold air, most frequently 
the latter. In the present case, if the palsy was occasioned by the 
blow from the water I think there would be no question but that 
it was an accident, but on the whole testimony, I am disposed to 
think that this was not the cause of the paralysis but that the real 



422 State Department Reports 

[Vol.20] State Industrial Commission 

cause was the draft of air in which the claimant worked, and" I 
should favor such a finding. If this be true, then the only ques- 
tion to be determined is whether the deputy was wrong in denying 
an award for that reason in the first instance. 

The cases of injury or death from the action of the elements are 
very puzzling when it comes to the execution of the Compensation 
Law. We have been holding that frost bites and prostrations from 
heat are accidents when they are occasioned by conditions of tem- 
perature which the injured man is subjected to which are more 
severe than the condition under which other workmen in the same 
employment are called upon to work, and the courts have to this 
extent at least upheld the Commission in both frost bite and heat 
prostration cases. I do not see why by a parity of reasoning a 
serious physical ailment brought on by an excessive draft of cold 
air is not in the same category, and I recommend that the award 
be affirmed, but on the theory that the claimant's facial paralysis 
was caused by working in an excessive draft of cold air and that 
the same is an industrial accident within the meaning of the 
Compensation Law. 

Lynch and Perkins, Commissioners, concur; Sayer, Commis- 
sioner, dissents for the reason that on the testimony he cannot find 
that the facial paralysis was caused by the blow of the water 
striking him in the face and that if on the other hand it was 
caused by the draft of air it is not more than a natural disease and 
is not in the nature of an accident ; Mitchell, Commissioner, dis- 
sents on the grounds that the disability may have been caused 
either by one or both and on neither does he believe it to be an 
accident. 



Magee v. Pennsylvania Railroad Co. 423 



State Industrial Commission [VoL 20] 



In the Matter of the Claim of Sophie M. Magee, Widow, for 
Compensation under the Workmen's Compensation Law, on 
Account of the Death of Thomas Magee, against Pennsyl- 
vania Raileoad Company, Employer and Self-Insurer 

Case No. 31078 

(Decided May 28, 1919) 

Cancer — sot caused by accident — award denied. 

On September 30, 1016, deceased's back was injured by a fall. Prior 
thereto specialists, after examination, had found his vocal cords inflamed 
and pronounced them as cancerous. He died of cancer of the throat on 
November 7, 1917. Evidence examined and held, that there was no 
causal relation between the accident and the death of deceased and the 
decision denying an award will be affirmed. 

Claimant's husband, Thomas Magee, received an injury on 
September 30, 1916. He stepped on a piece of brass and fell 
injuring the lower part of his back. Short time prior to his 
accident the deceased was examined by two specialists who found 
inflamation of the vocal cords which they diagnosed as cancerous 
but thought an operation not advisable. The doctor who examined 
him the day after the accident found no objective evidence of an 
injury, though there was some soreness of the back. In a couple 
of months he was able to go to his doctor's office. By February 
or April of the following year, carcinoma of the larynx had 
greatly advanced, an opening was made and a tube inserted in 
the throat which was never removed while he lived. Pus also 
started in the region of his injury, but was conceded to be caused 
primarily by the cancer. He died of cancer of the throat on 
November 7, 1917. 

An award has been denied and an appeal taken. Our legal 
department has asked to have the case reviewed, feeling that there 
is evidence which might warrant an award. 



424 State Depabtment Reports 

[Vol. 20] State Industrial Commission 

Geo. A. Larkin, for claimant. 
Allen J. Hastings, for employer. 

Lyon, Commissioner. — There is undoubtedly some evidence 
here upon which a finding of a causal relation between the injury 
and death might be made, and such a finding upon a question of 
fact could not be reviewed on appeal (Compensation Law, § 20) 
but that of itself does not make such a finding proper. It rather 
calls for a very careful weighing of the evidence in order that 
the fact which cannot be reviewed may be properly determined. 
It is perfectly true as claimed by the attorney for the claimant 
that if an accident aggravates or lights up a previously diseased 
condition and hastens it to a fatal close, a case for payment of 
death benefits is made out. 

The Blatt case (7 State Dept. Rep. 388), in which 
an award was made and affirmed on appeal, is relied 
upon. In that case Mr. Blatt had a cancer of the 
stomach which he knew nothing about. He had a very 
severe accident in his abdominal region, very near the seat of the 
cancer. His very serious illness began very soon after the acci- 
dent and he died within a few weeks. Here, however, the injury 
was far removed from the seat of the cancer, and was not of 
itself very serious. Deceased was on the streets in less than two 
months. I do not think that any of the doctors claim that the 
accident accentuated the cancer itself. The claim seems to be 
based on the proposition that the accident so lowered the patient's 
resistence that he could not successfully combat the disease. I 
suppose there are cases where such a situation would satisfy the 
definition of an injury found in subdivision 7 of section 3 of 
the law, namely — " such a disease or infection as may naturally 
and unavoidably result therefrom," i. e., from the accident, but 
I am afraid there is a disposition to over-work the theory of 
"lowered resistence." 

If this comparatively trivial accident can have any causal 
relation to Mr. Magee's death more than a year later, his can- 



Connelly v. McLoughlin, Inc. 425 



State Industrial Commission [Vol.20] 

cerous condition must have been much worse than any of the 
doctors then supposed or than the evidence warrants us in now 
supposing. I think the preponderance of the evidence is against 
a finding of any causal relation between the accident and the 
death of Mr. Magee and that the decision should be affirmed. 

On the 28th day of May, 1919, the Commission acted on the 
foregoing matter in accordance with the foregoing opinion. 

Lynch and Sayer, Commissioners, concur. 



In the Matter of the Claim of Minnib Connelly, Widow, for 
Herself and Minor Children, for Compensation under the 
Workmen's. Compensation Law, on Account of the Death of 
John Connbllt, against Thomas P. McLoughlin, Inc., 
Employer; Travelers' Insurance Company, Insurance 
Carrier 

Case No. 49556 

(Decided May 28, 1M9) 

Death from tuberculosis attributed to accidental injury. 

Deceased, while working in a trench, was buried up to his neck by a 
care in. His collar bone was fractured and one leg injured. While in 
the hospital a cough developed and within six months there was evidence 
of advanced tuberculosis. He died about eight months after the accident. 
Held, that the accident lighted up a latent tubercular condition and was 
a serious factor contributing to his death. Award made. 

Claim for death benefits is made by Minnie Connelly and 
her minor children growing out of the death on January 22, 1919, 
of her husband, John Connelly, consequent as it is claimed 
upon an injury received on May 15, 1918. The injury is thus 
described by the employer: "Digging a trench for sewer line 
when side of trench caved in and buried Connelly up to the neck. 



426 State Department Reports 



[Vol. 20] State Industrial Commission 



Fractured collar bone and contusions on Iqg." Mr. Connelly 
was in the Holy Family Hospital from May 15 to June 17 and 
again from July 24 to August 21, 1918. Compensation was 
paid until his death. 

The question to be determined is, whether a causal relation 
has been established between his accident and his death. 

Claimant in person. 

K A. Willoughby, for insurance carrier. 

Lyon, Commissioner. — The death certificate gives the cause 
of death as " Lobar Pneumonia, fracture of clavicle." The hos- 
pital record on his first admission shows the following: " High- 
est temperature 102 on May 30th; May 17th coughed all night, 
May 22nd, coughed frequently during night; May 26th con- 
tinuously coughing now and expectorating freely." After his 
second entry into the hospital the record shows the following: 
"Diagnosis, fracture, old, united, right clavicle; pulmonary 
tuberculosis. Physical examination on readmission, fracture of 
right clavicle, poorly united; much overriding, union probably 
fibrous. Tuberculosis bacilli negative." 

As already stated deceased drew compensation during the bal- 
ance of his life. On November 20, 1918, our chief medical exam- 
iner examined him and made the following report : " Examination 
of right clavicle shows evidence of a fracture which has healed 
with overlapping. There is slight ex-articular adhesions at 
shoulder joint which prevents complete elevation of the arm to 
a verticle line. If this were the only defect claimant ought to 
be able now to resume work. This claimant however is very 
much emaciated and shows evidence of a suspicious pulmonary 
lesion — Tuberculosis." 

He died a little over a month afterwards. The widow testified 
that he was perfectly able to work up to the time of his injury. 

We have then the case of a man perfectly able to work receiving 
a serious injury, who begins to cough continuously within a 



Eckebt v. Laxanob & Grosjean Mfo. Co. 427 

% 

State Industrial Commission [Vol.20] 

few days, gives evidence of pulmonary tuberculosis in a little 
over two months; never does another day's work, in six months 
after the injury gives every evidence of advanced tuberculosis 
and is dead in about eight months, of a lung disease either tuber- 
culosis or pneumonia or perhaps both. In my opinion the 
accident lighted up a latent tubercular condition and was a 
serious factor contributing to his death. I advise an award. 

On the 28th day of May, 1919, the Commission acted on the 
foregoing matter in accordance with the foregoing opinion. 

Lynch and Sayer, Commissioners, concur. 



In the Matter of the Claim of Chables C. Eckekt, for Com- 
pensation under the Workmen's Compensation Law, against 
Lalancs & Grosjean Manufacturing Company, Employer; 
Globe Insurance Company, Insurance Carrier 

Case No. 250410 

(Decided May 28, 1919) 

When award will he sustained although testimony of claimant la indefinite. 

While working with enameling ware some material entered claimant's 
eye and caused complete blindness. Although claimant's testimony 
is indefinite as to the time when the accident happened and as to the 
material being used, the award already made will be sustained upon 
statements made by the employer and examining physicians. 

By the Commission. — The testimony of the claimant in this 
case is most unsatisfactory. He alleges that while working for 
his employer on or about the 23d day of August, 1918, some of 
the material, or as he calls it, mass, with which they were enamel- 
ing ware, splashed into his face and a portion of it entered 
his eye, and did not begin to trouble him for two or three days, 
but has since become so bad that it is now admitted that the 



428 State Depabtmhnt Reports 

[Vol.20] State Industrial Commission 

sight is entirely gone. The claimant's testimony does not fix 
very definitely the time when the accident occurred, and there is 
a good deal of discrepancy as to the material which he was using. 
In one place he seems to treat it as a powder which flies around 
in the air and in another place repudiates that and says it is 
a wet substance that splashes into his face. On the whole testi- 
mony, however, it seems that something which he was using 
entered this eye and has caused his complete blindness. The 
employer's first report of injury gives the cause of the accident, 
as follows : " While piling up goods on the floor something flew 
into his right eye." In addition to the claimant's testimony that 
he received something in his eye which caused its loss of vision, 
George H. Dupont, chief chemist, wrote a letter to a Mr. English, 
in which he says: There is a possibility, in fact a probability 
that any dry material used in the enamel ware which would be 
thrown into the eye would likely be decomposed by the action 
of the fluids in the eye, as they are of an acid nature freeing 
hydrofluoric acid by decomposing fluorides which are present in 
the mass. This acid is very strong and would doubtless injure 
seriously the surface of the eye. This action takes place imme- 
diately but is not felt until some time after, it has been started." 
Dr. Henry F. Parker made out a report of the accident in 
which he gives the date of accident as August twenty-third and 
when asked to state in the patient's own words how it occurred, 
said : " While piling up goods on the floor something flew into 
his eye right eye inflaming his right eye to such an extent that he 
could not see out of it." Afterward Dr. Parker sent a statement 
in which he says : " The mass or portion of it that entered his 
eye was received while he was performing his work and sifting 
the mass. On Monday, August 26th, at 5 p. m. upon his return 
to work he came in with a small opaque spot on the right cornea, 
a severe conjunctivitis, and as is the usual custom I washed 
the eye out with a plain Boric Acid solution. Considering it 
a very serious case I sent him at once to the Brooklyn Eye & 
Ear Hospital. On the 28th — the eye not improving — he was 
sent to Dr. Shipman under whose treatment he has been up 



Eckert v. Lalance & Geosjean Mfg. Co. 429 



State Industrial Commission [Vol. 20] 

to the present time, and from this injury he has lost the sight 
of his right eye. The opaque spot was the same in appearance as 
that made by any burn," 

Dr. W. Waugh in a statement says : " I saw Charles Eckert on 
August 26, 1918, he had an ulcer cornea right eye, which he 
thought came from a foreign body in eye on August 23, 1918. 
Ulcer treated. Treatment ordered August 27th, ulcer larger, 
hypopyon August 28, no improvement. I did not find any foi> 
eign body in eye." 

Dr. Shipman on October 27, 1918, made the following 
statement : " Charles Eckert, age 66 * * * first consulted 
me August 29, 1918, with reference to his right eye. Upon this 
examination I found an Iridocyclitis with a creeping creecentic 
ulcer of the cornea, and pus in the anterior chamber. 

" I considered this eye in a hopless condition at the first exam- 
ination, and so reported to Dr. Parker of the Lalance & Grosjean 
Manufacturing Company. 

" I have seen him and treated him at intervals since August 
29th. At no time has there been any prospect of the eye ever 
becoming a useful one. * * * 

"As to the source of this infection I can make no statement as 
I found no foreign body present." 

On these statements from the employer and the physicians 
who immediately treated the claimant's eye, I am of the opinion 
that the award already made for the loss of the eye is proper 
and should be sustained, notwithstanding the unsatisfactory con- 
dition of the claimant's own testimony, and I advise that the 
award be confirmed. 

On the 28th day of May, 1919, the Commission acted on 
the foregoing matter in accordance with the foregoing opinion. 

Lynch,. Lyon and Sayer, Commissioners, concur. 



480 Stats Department Reports 



[Vol. 20] State Industrial Commission 



In the Matter of the Claim of Ralph Romano, for Compensation 
under the Workmen's Compensation Law, against Siff 
Brothers, Employer; Zurich General Accident and Insur- 
ancb Company, Insurance Carrier 

Case No. 326273 

(Decided May 28, 1919) 

Injury from assault by strikers — half time allowed. 

Claimant was injured by an assault by strikers from plants other than 
his employer's and was out of employment for four weeks. His employer 
had changed the hours of work in order that his employees in going to 
and returning from work might not be on the streets when the -strikers 
would be likely to be there. At the time of the assault the employer was 
accompanying claimant and other men to a subway station in order 
if possible to prevent an assault upon them. The question is, did the 
assault arise in the course of employment. Held, that while the question 
is a very close one, the fact that the employer himself deemed it wise to 
accompany his men makes it somewhat analogous to the cases where the 
accident occurred while the employer was furnishing transportation to 
and from the place of work. While the employer in this case did not 
furnish transportation he did accompany claimant because he anticipated 
an assault growing out of the employment and an award will be made 
for two weeks' time and the case closed. 

The employer in this case is a manufacturer of men's goods 
and had a contract with the United States government to make 
uniforms for the army. The employer in June, 1918, had 
found that one of his men had been stealing from him and there- 
upon discharged him. Considerable trouble was thereafter had 
between the employer and the union to which the man belonged, 
and from that time on until the following December the employer 
heard frequent rumors of a strike of his men and in fact during 
that time there were strikes in the garment industry in other 
plants, but not in the employer's. Matters seemed to have gone 
on in this way, growing rather worse than better, until on the 
sixteenth day of December, when the claimant left his employer/s 
plant to go to his home, he was assaulted by striking workmen 



Romano v. Siff Bbothehs 481 

r i n ii - ■ 

State Industrial Commission [Vol.20] 

from other plants, and the question to be determined is whether 
the assault arose out of and in the course of his employment 

Claimant in person. 

P. J. O'Brien, for insurance carrier. 

Lyon, Commissioner. — I suppose it is generally conceded 
that a workman is not covered by compensation ordinarily after 
he has completely left his employer's plant and entered upon a 
public highway for the purpose of returning to his home. There 
are, however, exceptions to this rule — as for example where the 
employer furnishes transportation for his employee to and from 
his place of business. In this case the employer was put on the 
stand and testified, among other things, as follows : " They [the 
union men] undertook to threaten some of our men and we had 
them arrested. The Judge they came before said if they did not 
lay off the men completely he would give them a ride for it and 
send them away without any question. From that time, we 
weren't bothered until about the time the Government issued its 
stop order, stopping work on Government contracts until they 
could get their bearings, and that is the time these men were 
assaulted." 

Mr. Siff further testified that in order to give his men pro- 
tection going to and coming from their homes, their hours were 
changed so that the men came about an hour ealier and left about 
an hour earlier than the usual quitting time with a view of having 
them off the street during the time when the strikers would be 
liable to interfere with them, and that on the day of this particular 
assault he himself was accompanying the claimant and some 
other men from his place of business to the subway station because 
he thought if he were accompanying his men they would be less 
apt to be assaulted. He said: "I was with the four of them 
when they were set on, that is, the four men I accompanied 
taking them to the subway station. We changed our hours some- 
what; * * * We thought if we were out on the streets a 
little bit earlier than that time, approximately an hour earlier, 



482 Stma Department Repobts 

[Vol. 20] State Industrial Commission 

we might not run into such great crowds. Other houses in the 
industry were out on strike." 

There can be no question, I think, but that this assault arose 
out of the employment. The only question is, did it also arise 
in the course of his employment. The question is an exceedingly 
close one. I think the fact that the employer himself deemed it 
a wise precaution to accompany the injured man makes it some- 
what analogous to the cases where the accident occurred while 
the employer is furnishing transportation to his employees to 
and from their place of work. The employer in this case, it is 
true, did not furnish transportation but accompanied the injured 
man, because he anticipated an assault growing out of the employ- 
ment and I think an award should be made for two weeks and the 
case closed, the injured man having testified that he was out of 
employment only four weeks. 

On the 28th day of May, 1919, the Commission acted on the 
foregoing matter in accordance with the foregoing opinion. 

Lynch and Sayer, Commissioners, concur. 



In the Matter of the Claim of Mobbis Altermaw for Compensa- 
tion under the Workmen's Compensation Law against A. I. 
Namm & Son, Employer, and Zurich General Accident and 
Liability Insurance Company, Ltd., Insurance Carrier 

Case No. 4893 

(Decided May SI, 1919) 

Employee injured in attempting to jump off moTing eleTator — award made. 

Claimant haying finished his work and about to leave the plant boarded 
an elevator on the sixth floor for the purpose of descending. The elevator 
started to ascend and claimant became alarmed and attempted to jump 
off while the elevator was in motion. In doing so he was caught between 
the car and the floor and injured. Award made. 



AliTBBKAN V. NaMM & SON 433 

State Industrial Commission . [Vol. 20] 

This claim came on for hearing before the State Industrial 
Commission at its office 230 Fifth avenue, New York city, on 
July 13, 1917, August 24, 19 17,, September 21, 1917, August 9, 

1918, September 20, 1918, October SI, 1918, December 6, 1918, 
January 17, 1919, February 7, 1919, March 26, 1919, May 29, 

1919, and May 31, 1919. 

Bernard L. Shientag, counsel to State Industrial Commission. 

Alfred W. Andrews, attorney for employer and insurance 
carrier. 

Claimant in person. 

By th« Commission. — All the evidence submitted before this 
Commission having been heard and duly considered, the Commis- 
sion makes its conclusions of fact, award and decision, as follows : 

On June 17, 1917, the day on which Morris Alterman sustained 
the injuries herein referred to, he resided at No. 443 Stone 
avenue, Brooklyn, N. Y., and was employed as a carpenter by 
A. I. Namm & Son, with principal offices and place of business 
at Fulton street, Brooklyn, N. Y., said company being engaged 
in the general drygoods business and general department store. 

On June 17, 1917, Morris Alterman was engaged in the regular 
course of his employment as a carpenter and was moving parti- 
tions on the fifth and sixth floors of his employer's store at 452 
Fulton street, Brooklyn, N. Y., and at or about 7 p. m. on that 
day, after having finished his day's work, and being about to 
leave the plant of his employer, he went to an elevator on the 
sixth floor for the purpose of descending to the main floor and 
thereby proceeding to the street, and having gotten on the said 
elevator, it started to ascend to the top of the building, as a result 
of which the said Morris Alterman became alarmed and in an 
attempt to jump off the elevator while in motion was caught 
between the car and the floor, as a result of which he sustained 
a laceration of the right leg, with rupture of the patella ligament, 

extensive contusion of the left thigh and left shoulder, said 
Sbatb Deft. Kept.— Vol. 20 28 



434 State Department Reports 

[Vol. 20] State Industrial Commission 

injuries disabling claimant from June 17, 1917, to June 2, 1919, 
on which date he was still disabled. 

The average weekly wage of Morris Alterman was the sum 
of seventeen dollars and thirty-one cents. 

The injuries sustained by Morris Alterman were accidental 
injuries and arose out of and in the course of his employment. 

It does not appear whether written notice of injury was given 
to the employer within the time prescribed by section 18 of the 
Compensation Law, but inasmuch as the employer had actual 
knowledge of the injury, neither employer nor insurance carrier 
was prejudiced by such failure, if any. 

Award of compensation is hereby made against A. I. Namm & 
Son, employer, and Zurich General Accident and Liability Insur- 
ance Company, Ltd., insurance carrier, to Morris Alterman, in- 
jured employee, for fifteen weeks at the rate of $11.54 per week, 
covering period from February 16, 1919; to June 2, 1919, in the 
amount of $173.10, plus five bi-weekly installments of $23.08 
thereafter, to cover the period from June 2, 1919, to August 11, 
1919, and this claim is hereby continued for further hearing. 

The failure, if any, to give written notice of injury within the 
time prescribed by section 18 of the Compensation Law is hereby 
excused on the ground that neither employer nor insurance 
carrier was prejudiced by such failure, if any, and for the reason 
that employer had actual knowledge of the injury. 



In the Matter of the Claim of Chakles Claek for Compensation 
under the Workmen's Compensation Law, against Lepbbstre 
Miller Stock Farm, Inc., Employer; Travelers' Insurance 
Company, Insurance Carrier 

Albany Case No. 3798 

(Decided June 12, 1919) 

When award for compensation may be rescinded on account of mistake of 
fact. 

Claimant was injured while employed by the British government. 
An agent of defendant Stock Farm reported the accident by mistake as 
an accident to one of its men and nn agreement of compensation was 



Clark v. Miuleb Stock Fabm, Inc. 435 

State Industrial Commission [Vol.20] 

entered into finally approved by the Commission. Held, that the award 
may be rescinded by reason of the mistake of fact with right to claimant 
to show that defendant Stock Farm did not act in the matter through a 
mistake of fact. 

The employer in this case owns a large stock farm in the vicinity 
of Goshen, N. Y. The British government through a board known 
as the British Remount Commission, desiring to secure the use 
of a portion of this stock farm for the purpose of assembling, 
feeding and fitting out horses for the use of the British govern- 
ment in the late war, entered into a contract with Leprestre Miller 
Stock Farm, Inc., under date of January 14, 1918, by which the 
Leprestre Miller concern agreed to furnish stable facilities and 
feed, consisting of grain and hay, for the animals gathered together 
in that place by the British government, and generally, to keep 
the premises in condition for which they were to be paid a certain 
per diem amount per animal. The contract between the British 
Commission and Leprestre Miller Stock Farm, Inc., contained 
among other things, the following : 

"5. The hospital boxes and stalls to be cleaned out by men 
provided by the British Remount Commission, but the Contractor 
to remove the manure from these boxes and stalls. 

" 6. The Contractor to provide men at the rate of not less than 
one man to 50 animals, including the sick, and to be responsible 
for, 

" (a) The issuing of feeds to all animals except those in hos- 
pital boxes and stalls. For the general cleanliness of the Depot 
and for the loading and unloading and handling of animals as 
required by the Officer Commanding. 

" The British Remount Commission to provide the staff neces- 
sary for the care of sick animals in hospital boxes and stalls, for 
the disinfecting of the whole depot, and for culling sick from the 
healthy." 

The claimant was injured while working among the animals 
on this stock farm. 

The questions to be determined are whether the Commission 
has any right to disturb the agreement for compensation which has 
been approved and became an award, and if so, whether the 



436 State Department Reports 



[Vol.20] State Industrial Commission 



claimant was at the time of his injury an employee of the British 
government or of the Leprestre Miller Stock Farm Corporation. 
If of the latter, he is entitled to compensation at our hands. If, 
however, he was in the employ of the British government an 
award must be denied because no claim has been filed against the 
British government, and probably also because this Commission 
would not have jurisdiction over employees of a foreign govern- 
ment, although the latter point need not be decided. 

The matter is somewhat complicated by what is alleged to be 
an error on the part of one of the agents of the Leprestre Miller 
Company. Supposing that there was no question about the 
employment, an agent of the Stock Farm Company reported the 
accident as an accident to one of its men, and thereupon an 
agreement for compensation was entered into between the injured 
man and the Leprestre Miller Stock Farm, Inc., dated February 
12, 1918, the injury having happened on the preceding twentv- 
third of January. Thia agreement was filed with the Commis- 
sion on the 11th day of May, 1918, and was disapproved by the 
Commission on May 29, 1918. On June 19, 1918, the case was 
reconsidered and the agreement was approved as rendered. On 
July twenty-ninth, the matter came on before the Commission 
when the former act of the Commission approving the agreement, 
was affirmed and the case was marked closed and notice thereof 
sent. 

Claimant in person. 

E. A. Willoughby, for insurance carrier. 

Lyon, Commissioner. — The undisputed testimony is that Mr. 
Clark was an employee engaged in the hospital service of the 
British government under the provision of the contract already 
quoted, which provides: " The British government to provide the 
staff necessary for the care of sick animals," etc. 

The evidence is that Mr. Clark had previously been in the 
employment of the Leprestre Miller Corporation, but that when 
the contract with the British government was entered into, he with 



Clark v. Milleb Stock Farm, Inc. 437 



State Industrial Commission [Vol. 20] 



others was discharged from that employment and that the British 
government then selected such of the former employees of the 
Leprestre Company as it wished and made a definite contract of 
employment with them. Of these men so selected and employed 
by the British Government, the claimant was one. The undisputed 
testimony is that Mr. Clark was injured while culling out a sick 
animal from those belonging to the British government, or as one 
witness termed it, " he was cutting out a sick horse." The agree- 
ment already referred to described the accident, as follows: 
" While attempting to mount a horse injured struck himself on 
the saddle horse." Mr. Brace, the assistant treasurer of the 
Leprestre Corporation testified, as follows : " Q. What was Clark 
doing there? A. Clark worked for the British in cutting the 
sick animals that were in the hospital. They employed their own 
men in cutting out the sick animals that were in the paddock 
outside the hospital. Q. Who employed Clark f A. The British." 
On this undisputed testimony, I think the finding must be that 
the claimant was not an employee of the Leprestre Miller Corpora- 
tion but was employed by the British government, and that the 
award made against the Leprestre Miller Stock Farm, Inc., was 
therefore unwarranted, but the question arises whether the Com- 
mission at this late date has the authority to set aside an award 
made on consent of both parties and long acquiesced in. In the 
case of Fischer v. Genesee Construction Company, decided by the 
Appellate Division of the Third Department at the May Term, 
1919 (187 App. Div. 850), the Commission had rescinded an 
award made in which the State Fund was the insurance carrier 
and in which the State Fund's representative had acquiesced at 
the time the award was made. The court said: "The State 
Fund so far assented to this award that it would not be permitted 
a review upon appeal. (Cunningham v. Buffalo Copper & Brass 
Rolling Mills, 171 App. Div. 955, 956.) Neither, upon its appli- 
cation, should the Commission annul the award except upon new 
evidence clearly showing its injustice and that the counsel for 
the Commission was deceived, overreached or acted upon a clear 
mistake of fact" 



438 State Department Reports 

[Vol.20] State Industrial Commission 

Upon this ruling, in my opinion, the only ground upon which 
we can reverse the award already made in this case is that it was 
made on a clear mistake of fact, the record showing, although no 
witness was called to swear to it, that the report of the accident 
was made to the Travelers' Insurance Company by mistake, sup- 
posing that the claimant was an employee of the stock farm and 
not of the British government. Notice of the rehearing was given 
to the claimant and inasmuch as there is no denial of the statement 
that the claim was presented to the insurance carrier through a 
mistake of fact, I think the award may be rescinded. Claimant, 
however, should have the right, if he is so advised, to present facts 
to the Commission showing that the acquiescence of the Leprestre 
Stock Farm was not secured through a mistake of fact 

Mitchell and Lynch, Commissioners, concur. 



In the Matter of the Claim of Guiseppe Malandrino, for Com- 
pensation under the Workmen's Compensation Law, against 
Southern New York Power and Railroad Corporation, 
Insurance Carrier 

Case No. 1737-A 

(Decided July 1, 1919) 

Injury from fire built by employee for his comfort upon hit employer's plant 
— award made. 

Claimant, employed in a sand bank, while waiting for a team to return 
for a load built a fire in order to keep warm. A spark flew into his eye, 
destroying his vision. Held, that a workman does not take himself out 
of the scope of his employment within the meaning of the Compensation 
Law when he does upon his employer's plant the things which an ordinary 
workman may be expected to do for his own convenience and comfort. 
Award made. 

This claim for compensation for the loss of an eye was once 
denied but has been reheard and a very voluminous record made. 
One of the claims of the employer is that the accident if it arose 



Malaxdbixo r. Southskn X. Y. Poweb & R. R. Corp. 439 

i 

State Industrial Commission [Vol. 20] 

out of the employment arose in interstate commerce, bat that con- 
tention was submitted to our legal department and overruled and 
may now be omitted from consideration. The undisputed evidence 
is that the claimant, who was a section man, was engaged in 
November, 1917, in helping others to take sand or gravel from 
the premises of one Sestito, for the purpose of use on the road of 
the employer. The morning was not inclement but was rather 
cold and after the departure of one load of gravel from the bank 
the workmen had an interval when they had nothing to do until 
the return of another team. The claimant for the purpose of 
producing some warmth, started a fire with some dry twigs and 
pieces of wood, and while so doing a spark from the fire flew into 
his eye causing the entire loss of vision. 

The only question to be determined is whether this accident 
arose out of and in the course of the claimant's employment 

Dubois & McDennott, for claimant. 

N. P. Willis, for employer. 

Lyon, Commissioner. — There is a good deal of controversy over 
the question whether in building a fire, the claimant did anything 
more than to follow a not uncommon custom among the workmen 
in this sand bank on these cold mornings, it apparently being 
conceded that if it was customary for the workmen to build these 
fires, then the accident arose out of and in the course of the 
employment It is stated that the men had been forbidden, to 
build these fires and had been allowed the privilege of using a 
greenhouse in the near vicinity for the purpose of having a warm 
place in which to eat their lunch and of warming themselves, but 
the testimony on this point also leaves the matter very .much in 
dispute. There is evident in the record from which a finding 
might be made that the claimant was only following the custom 
in building the fire which was the cause of his accident, but the 
testimony upon which such a finding could be made is not very 
convincing because it is strenuously denied by various witnesses 
who are in position to know. I, therefore, put my decision on the 



440 State Depaet^ent Repouts 

[VoL 20] State Industrial Commission 

I 

broad ground that a workman does not take himself out of the 
scope of his employment within the meaning of the Compensa- 
tion Law when he does upon his employer's plant the things which 
an ordinary workman- may be expected to do for his own con- 
venience or comfort, — as, for instance, preparing food, securing 
drink or attending to calls of nature. Such seems to have been the 
view of the courts in cases like that of Chludzinski v. Standard Oil 
Company, 176 App. Div. 87, where an employee on his employer's 
plant entered a building which so far as the evidence shows, no 
duty to his master required him to enter, and the case of Etherton 
v. Johnstown Knitting Mills, 184 App. Div. 820, where an employee 
going to the basement of the employer's plant to put a bottle of 
tea on the boiler in order to have it kept warm for her mid-day 
lunch, slipped and fell on the stairway. In neither of these 
cases can it be said that the act which the employee was doing 
contributed directly to the benefit of the employer or to the 
furtherance of the work in hand. It is true that many cases 
have been decided on the ground that the specific thing being done 
when the accident happened was directly in furtherance of the 
employer's work or of his interests, but I do not think this is the 
exclusive ground on which a finding can be made that the accident 
arose out of the employment 

The decisions in both of these cases referred to above, in my 
opinion, have to rest upon the proposition that an employee has 
the right to do in the course of his employment the common things 
which men generally do under such circumstances. It seems to me 
to have been the most natural thing in the world for these workmen 
on this cold morning when they had nothing to do in the absence 
of the teams that were drawing the sand and gravel, to attempt 
some sort of artificial warmth and that the employer might antici- 
pate that they would do so. It is true that the building of the fire 
did not, except in a very remote degree, further the general pur- 
poses of the employer, but certainly the employer ought not and 
probably did not object to his workmen making themselves as 
comfortable as possible in the intervals when their work was not 
pressing, and it seems to me that, on these general principles, 



Gbaffe v. Aet Color Printing Co. 441 



State Industrial Commission [VoL 20] 



inasmuch as this employee was injured in the course of his employ- 
ment and on the employer's plant while doing something which is 
not expressly forbidden but might have been anticipated by the 
employer, he has not taken himself out from under the protection 
of the statute and I advise an award for loss of the eye. 

Perkins and Mitchell, Commissioners, concur. 



In the Matter of the Claim for Compensation under the Work- 
men's Compensation Law, on Account of the Death of Felix 
Graffs, against Art Color Prfxting Co. 

Death Case No. 51839 

(Decided July 1, 1919) 

Atmospheric conditions of work room aggravating ailment causing fall and 
death — award made. 

Deceased was found in the press room of his employer's plant, lying 
on the floor near the rear of the press upon which he worked. His skull 
was fractured. He died about four hours after reaching the hospital. 
The room was dark. Near where he was found was a roll of paper weigh- 
ing about 1,500 pounds, with a metal spindle protruding about twelve 
inches on each end. The room was kept at a high temperature and when 
the presses were running oil, grease, ink and dust were thrown off. The 
floor was saturated with oil. There was no positive evidence as to how 
the injury to deceased occurred. There is circumstantial evidence that 
deceased fell owing to the conditions surrounding him in the press room. 
There is medical evidence that he was predisposed to vertigo by physical 
ailments and medical evidence that the conditions under which deceased 
worked would tend to aggravate his ailment so as to cause him to fall. 
Held, that there is sufficient proof to warrant the finding that the atmo- 
spheric conditions of the press room aggravated deceased's ailment, caus- 
ing his fall and death, and under the authority of Winters v. New York 
Herald Company, 171 App. Div. 960, an award will be made. 

By ths Coif mission. — This claim arises out of the death of 
Felix Graffe on November 19, 1917, while employed by (he 
Art Color Printing Company, of New York city. It seems that on 
November 19, 1917, Graffe together with other employees quit 
work at 10 Vt M. for the purpose of going to supper. At about 



±42 State Department Reports 



[VoL 20] State Industrial Commission 



10:49 p. m. upon returning to the press room of the Art Color 
Printing Company, after having had his supper, Daniel A. Con- 
nors, a fellow workman of Graffe, found the body of the latter 
lying on the floor of the press room near the rear of the press at 
which Graffe was employed. Graffe was lying on his back between 
rolls of paper, which were to be used on the press, with his head 
toward the press. Graffe at that time was in a comatose state, and 
after having been removed to the hospital it was discovered that 
he was suffering from a fractured skull, as a result of which he 
died about four hours after reaching the hospital. The only 
light in the press room was from a door leading into the press 
room and about thirty-five feet away from where Graffe lay, the 
point at which Graffe lay being very dark. On one side of him 
were two rolls of paper and on the other side a third roll, which 
had an iron or steel spindle protruding beyond the end of the 
paper about twelve inches on each end. The outside wrapper of 
the paper had been taken off and it was in all readiness to be 
placed upon the press. Each roll of paper weighed about 1,500 
pounds, and it was part of Graffe's duties to help place these rolls 
of paper on the presses. It also appears that the press room was 
kept at a high temperature, and that while the presses were 
running there was thrown off in the air quantities of oil, grease 
and ink, together with the fine dust coming from the cutting of 
paper. 

The question involved is whether or not the injuries which 
Graffe sustained were accidental and arose out of and in the 
course of his employment. There is no positive evidence as to 
how Graffe sustained the fracture of the skull. Under section 21 
of the Workmen's Compensation Law it must be presumed that 
the claim comes within the Workmen's Compensation Law, but we 
cannot go so far as to presume that an accident did happen. On 
the other hand, if there is any evidence which would reveal circum- 
stances supporting the finding of fact that an accident did happen, 
as was said in the case of Chludzinski v. Standard Oil Company, 
176 App. Div. 87, we cannot under the law indulge in the presump- 
tion against the claim, and once any evidence is given which would 



Graffe v. Aet Colob Printing Co. 443 



State Industrial Commission [Vol. 20] 



tend to show an accident happened, the burden of proof shifts 
from the claimant to the employer, who must then show that an 
accident did not happen. It is necessary for us to examine the 
testimony to see if there is any proof by the claimant that an 
accident did happen. Daniel A. Connors, a fellow workman of 
the deceased, testified that on the night in question when he 
entered the press room, all the lights of the press room were out 
except the one which was near the door, and which was about 
thirty-five feet from the machine where the deceased worked, and 
that it wa6 very dark at the point where the deceased lay. He 
states that on one side there were two rolls of paper and on the 
other side one roll of paper, the latter roll being near the press 
with a spindle through it in readiness to be placed on the press, the 
said spindle protruding about twelve inches from each side of the 
roll. He testified that on the floor about the press room were 
papers, ink, oil and grease, and that the deceased's clothing was 
covered with oil and grease, and that his shoes were oil soaked. He 
told that the atmospheric condition in the plant was polluted due 
to the throwing off of a spray of ink from the presses; that the 
press room was necessarily kept at high temperature, and that per- 
sons working in the press room sometimes became subject to a 
shakiness and sickness. After these facts, the fact that Graffe sus- 
tained a fracture of the skull which was caused by a blow of some 
hard substance, it seems to me that this is evidence of an accident 
and that Graffe could have stumbled on the floor due to the oil and 
grease, or his own oil-soaked shoes; the room was dark and he 
could have tripped over the spindle, which protruded from the 
roll of paper which was ready to go on the press. I think under 
the decision in the case of Chludzinski v. Standard Oil Company, 
176 App. Div. 87, it is logical to find that an accident happened. 
When we have arrived at this point, the burden of proof shifts 
to the employer, and we must now examine the evidence given by 
the employer to show that an accident did not happen. The 
employer produced Dr. Harry Berkowitz, the deceased's private 
physician, and also a physician acting occasionally for the insur- 
ance carrier in workmen's compensation cases. He testified that 



444 State Department Reports 



[Vol. 20] State Industrial Commission 



he treated the deceased in November of 1917, and that the 
deceased had called at his office on November 19, 1917, the day 
on which the deceased met his death. He noticed that the deceased 
had a high blood pressure on the nineteenth of November, and 
that he found him suffering from a chronic kidney condition, 
which was not acute, and of the hardening of the arteries. Dr. 
Berkowitz was asked the following questions : " Q. Persons who 
are suffering from chronic nephritis and high blood pressure 
and hardening of the arteries, are they not subject to 
dizzy spells ? A. Yes. Q. That is one of the symptoms of that 
disease? A. Yes, vertigo attacks. Q. Had he Had vertigo? A. 
No, he had not. Q. Did you think he would get well of the 
nephritis ? A. Of the chronic nephritis ? Q. Yes. A. Why he 
could go along with the condition for years, — he was a clean 
living man as far as I know. Q. Why could he not have gone to 
work that morning as well as any other morning ? A. On account 
of the high blood pressure. Q. Would not his blood pressure be 
just as high .in a month? A. In a month? I did not want him 
to go ; the fact I advised him against it showed me I was a little 
afraid about his going out and being able to do his regular work. 
Q. Was he suffering from an acute sickness then? A. No, it 
wasn't acute. Q. Your advice would have been never to work 
again? A. I told him he should stay home and improve his 
condition for two or three days and then go back. A reduction of 
that blood pressure would no doubt have taken place." 

Although this evidence does not seem conclusive that an accident 
did not happen, we will presume that it is sufficient to shift the 
burden of proof back again to the claimant, and we next examine 
the witnesses of the claimant called in a rebuttal to the medical 
testimony offered by the employer. The claimant called Dr. 
Smith who had complete charge of the deceased while he had been 
in Bellevue Hospital, and he testified that the primarily producing 
cause of the deceased's death was a fractured skull, which was 
received from a blow or coming in contact with a hard substance 
as would occur if a person fell striking his head on a stone floor, 
and that a contributing cause was a heart ailment, from which the 
deceased had probably been suffering. The atmospheric condition 



Quaffs v. Abt Coloe Pkintino Co. 445 

State Industrial Commission [Vol.20] 

at the plant at the time the deceased's body was found was 
described to Dr. Smith, and basing his reply on the conditions of 
the plant, he stated that such conditions could produce a dizziness, 
which would cause a man to fall, as a result of which he could 
sustain injuries resulting in his death; and that assuming that 
the deceased had been suffering •from a heart ailment, the atmos- 
pheric condition in the plant would aggravate the ailment so as to 
produce a vertigo, which would cause the deceased to stumble or 
fall. Dr. Smith even went farther and stated that assuming the 
deceased had been suffering from the ailment described by Dr. 
Berkowitz, the atmospheric condition in the plant could aggravate 
the deceased's ailment to such an extent as to produce a vertigo 
and dizziness, causing the deceased to fall, thereby sustaining a 
fracture of the skull. This seems to again furnish sufficient proof 
to warrant a finding in favor of the claimant that an accident did 
happen. 

Under the case of Collins v. Brooklyn Union Gas Company, 171 
App. Div. 381, there were eye witnesses to the fall which resulted 
in the death of William J. Collins, and the only question involved 
in that case was whether or not the fall which caused Collins' 
death was due to cardiac syncope or his stumbling over some 
obstruction, and it was merely a question as to weight of evidence 
given by the eye witnesses as to which cause was responsible for 
the fall of Collins. In the case under discussion there are no eye 
witnesses to the fall of Graffe, and there is circumstantial evidence 
that Graffe fell due to conditions surrounding him in the press 
room. There is medical evidence that he was predisposed to 
dizziness and vertigo by physical ailments, but that previous to 
his death he had aever been affected with such vertigo or dizziness ; 
and finally there is medical evidence that the condition under 
which Graffe worked would tend to aggravate his ailment so as to 
cause him to fall and thereby fracture his skull. Assuming that 
the fall was caused by a dizziness or vertigo brought on by his 
ailment, the proof is sufficient to warrant the finding that that 
ailment was aggravated by the coridition under which Graffe was 
forced to work, and before the employer can be successful he must 



446 State Department Reports 

[Vol. 20] State Industrial Commission 

prove that the conditions under which Graffe worked did not 
aggravate his ailment, and. that his death was a direct result of 
his physical ailment without any other intervening cause. It 
seems to me that proof is sufficient to warant the finding that the 
atmospheric condition of the press room aggravated Graffe's ail- 
ment, and under the authority #f Winters v. New York Herald 
Company, 171 App. Div. 960, an award should be made in favor 
of the claimant. 

Lynch, Perkins and Mitchell, Commissioners, concur; Lyon 
and Sayer, Commissioners, dissent. 



In the Matter of the Claim of Gbaziano M. Mandatto, for Com- 
pensation under the Workmen's Compensation Law, against 
Hudson Shoeing Company, Inc., Employer; Tbavbleils' 
Insubanoe Company, Insurance Carrier 

Case No. 102374 

(Decided July 1, 1919) 

When subcontractor may be deemed employee of co-subcontractor and 
entitled to an award for injuries sustained. 

Claimant and the employer herein were subcontractors in erecting a 
building and had an understanding that they would mutually assist 
each other. Claimant had a derrick and engine on the premises for his 
work which was nearly completed, and most of his men were discharged. 
The employer herein asked claimant, pursuant to their mutual agreement, 
to use his derrick and engine to hoist a large timber. While doing so 
claimant's foot caught in the slack of the rope and was badly crushed. 
Held, that although claimant was not an employee of the employer herein 
within the ordinary meaning of the term, a man may be an independent 
contractor for his own purpose and as to one person and at the same time 
an employee within the meaning of the Compensation Law for another 
purpose and as to another person. Payment of wages is not a determina- 
tive feature and is never such a factor when an employee is loaned by 
one employer to another. If claimant, instead of hoisting the timber 
himself, had instructed one of his employees to do so and the employee 



Manbatto v. Hudson Shoeing Co., Inc. 447 

» - . . 

State Induatrial Commission [VoL 20] 

had been injured the employee would be entitled to compensation from 
the employer herein under the authority of Kucharuk v. McQueen, 221 
N. Y. 607, and there is no reason why the claimant herein should not 
stand in the same relation to the employer herein as claimant's employee 
would have stood if he had rendered the service. Award made. 

The White Fireproof Construction Company had a contract to 
erect a building on the corner of Dekalb avenue and Taaffe place 
in Brooklyn. They m^de a contract with the claimant to excavate 
for the cellar of said building. They made another contract with 
the Hudson Shoring Company to shore up the building on adjacent 
property. The claimant, for the purpose of excavating the cellar, 
had on the premises a derrick and a gasolene engine. An arrange- 
ment or understanding was had between the claimant and the 
representatives of the Hudson Shoring Company that they would 
mutually assist each other in their several jobs. In pursuance of 
this agreement the Hudson Shoring Company, among other things, 
had furnished the claimant with the use of certain planks and 
timbers in doing his excavating. After the excavating had been 
nearly completed and Mr. Mandatto had discharged most of his 
men, the Hudson Shoring Company asked him in pursuance of the 
agreement already spoken of, to make use of his derrick and gas 
engine to hoist for it a large timber or beam which it needed to 
use in its shoring operations. While doing so, the claimant's 
foot became caught in the slack of the rope and was badly crushed. 

The questions to be decided are whether claimant was an 
employee of the Hudson Shoring Company, Incorporated, within 
the meaning of the Compensation Law, and so entitled to com- 
pensation, and if so, at what rate is he to be compensated. 

James C. Danzillo, for claimant 

E. A. Willoughby, for insurance carrier. 

Lton, Commissioner. — There is no question but that the claim- 
ant is an independent contractor so far as the White Fireproof 
Construction Company is concerned. There is also no question 



448 State Department Reports 

[Vol. 20] State Industrial Commission 

that he was not an employee of the Hudson Shoring Company, 
Inc., within the ordinary meaning of the term " employee." That 
is to say there was no specific contract of employment at a specific 
wage. There can be no doubt but that a man may be an independ- 
ent contractor for one purpose and as to one person, and at the 
same time an employee within the meaning of the Compensation 
Law for another purpose and as to another person. Nor is the 
payment of wages at the time of the accident the determinative 
feature. This is never such a factor where an employee is loaned 
by one employer to another. 

If Mr. Mandatto, instead of hoisting the timber himself with 
the gas engine, had instructed one of his employees to do so and 
the employee had been injured while performing the service, the 
employee would clearly have been entitled to compensation at the 
hands of the Hudson Shoring Company, under the authority of 
Kucharuk v. McQueen, 221 1ST. Y. 607. In that case one Fonda 
was doing work for the Saratoga County Sanitarium in grading 
and digging ditches. Mr. McQueen had a contract for drilling a 
well for the supply of water for this sanitarium. Mr. Fonda 
frequently loaned men to McQueen and sometimes McQueen 
loaned men to Fonda. Fonda had nothing to do with the well 
digging except in loaning men to McQueen. On the day of the 
accident McQueen asked Fonda for a couple of men and Kucharuk 
and another man were furnished. Kucharuk was injured while 
assisting in drilling the well. An award was made against 
McQueen by the Commission which was affirmed by the Appellate 
Division and unanimously affirmed by the Court of Appeals. Why 
should not Mr. Mandatto stand in the same relation to the Hudson 
Shoring Company as his employee would have stood if the employee 
had rendered the service at Mr. Mandatto's instance and been 
injured. Mr. Mandatto was not on the payroll of the Hudson 
Shoring Company it is true, but he had arranged with that com- 
pany to render service for service. 

It seems to me that the case does not differ materially from that 
of a man who owning a team and wagon hires out to another party 
who pays him for his own service and the use of his team. In 



Mandatto v. Hudson Shoring Co., Inc. 449 

State Industrial Commission [VoL 20] 

such a case if the owner of the team is injured in the employment 
of the party making use of his services, an award is certainly 
proper. I entertain no doubt but that the claimant is entitled 
to compensation. 

As the claimant was not receiving a specified wage and had not 
been employed specifically to run a gas engine for substantially 
the whole year before his injury, his compensation must be fixed, 
in pursuance of subdivision 2 of section 14 of the Compensation 
Law, by taking the average earnings of an employee of the same 
class working substantially the whole of the immediately pre- 
ceding year in the same or a similar employment in the same or a 
neighboring place. The proofs are that the regular rate of wages 
for these engineers was at least six dollars per day for the year 
preceding the injury, which would give the claimant the maximum 
rate of compensation under the law. It cannot yet be told whether 
claimant has lost the entire use of the foot or not. The probability 
is, judging from present indications, that he has lost the greater 
part of the use of the foot and I should not be surprised if ulti- 
mately it were found that he had lost the entire use. In any event, 
it is altogether probable that the rate will have to be fixed ulti- 
mately at twenty dollars per week, in pursuance of the Phonville 
decision. An award should be made to date at fifteen dollars per 
week and the case continued subject to a readjustment of the rate 
at such time as the processes of recovery make it possible to deter- 
mine what proportion of the use of the foot has been lost 

Lynch, Perkins and Mitchell, Commissioners, concur; Sayer, 

Commissioner, dissents, on the ground that the injured claimant 

was not an employee of the Hudson Shoring Company within the 

meaning of the law. 

Statb Deft. Ret.— Vol. 20 29 



460 State Department Reports 



[VoL 20] State Industrial Commission 



In the Matter of the Claim under the Workmen's Compensation 
Law on Account of the Death of William Pettey, against 
St. Regis Paper Company, Employer; Travelers' Insurt 
anoe Company, Insurance Carrier 

Case No. 4677-S 

(Decided July 2, 1910) 

Interpretation of section 15, subdivision 7, of the Workmen's Compensation 
Law. 

Compensation was paid to deceased during his lifetime. He died 
without dependents. His death was due to his accident. The insurance 
carrier paid to the State Treasurer, under protest, $100 pursuant to 
section 15, subdivision 7, of the Workmen's Compensation Law. Held, 
that the statute in question should be construed as if it read " the 
insurance carrier shall pay to the State Treasurer for every case of 
injury causing death in which there are no persons entitled to compen- 
sation after the employee?* death, the sum of $100." The application 
of the insurance carrier for a refund of the $100 paid to the State 
Treasurer is denied. 

In this case the accident happened to the deceased in November, 
1917. Compensation was paid to him during his lifetime and on 
June 6, 1919, our deputy Commissioner held a hearing and decided 
that Mr. Pettey's death was due to his accident. No one appeared 
however, as defendants, demanding compensation and the Deputy 
made an award of $100 to cover funeral expenses and $100 pay- 
ment into the State Treasury, in pursuance of subdivision 7 of 
section 15 of the Compensation Law, which is as follows: " The 
insurance carrier shall pay to the State Treasurer for every case 
of injury causing death, in which there are no persons entitled to 
compensation, the sum of $100." 

The insurance carrier has paid to the State Treasurer this sum 
of $100, but does so under protest and now asks that it be reim- 
bursed on the ground that the payment is not called for by the 
Compensation Law. 

E. A. Willoughby, for insurance carrier. 



Pettey v. St. Regis Paper Co. 451 



State Industrial Commission [Vol. 20] 



Lyon, Commissioner. — The question raised is novel and not 
altogether easy of decision. It will have to be decided, in my 
opinion, not only on the exact wording of the statute, but on the 
reasons underlying the amendment of the Law, which provided 
for the establishment of this special fund for the purpose of caring 
for injured workmen who have a permanent partial disability 
added to a previous permanent partial disability, making a per- 
manent total disability. The amendment to the statute arose out 
of the necessity of caring for a class of compensation cases, which, 
but for the amendment, left the injured employee in a very 
serious financial situation. It called for compensation to an 
injured workman whose last disability finally put him out of the 
class of producers entirely, but where total disability could not 
fairly be charged against his last employer. When partially per- 
manently disabled, he still hr.d loft the ability to earn wages, but 
inasmuch as his final injury could not l>e said to have been the 
sole cause of the permanent total disability, it was necessary in 
order to do justice to the insurance carrier, that some arrangement 
should be made by which industry generally should carry the extra 
compensation. On the other hand, experience shows that insurance 
carriers usually, when they accept a risk, do so on the general 
theory that in case of the death of the injured employee, there 
will be a claim for compensation by someone standing in the 
relation of dependent to the deceased. When for any reason this 
expected dependency does not develop, there appears to be a 
certain saving to the insurance carrier which his contract scarcely 
contemplated and the special fund for the care of this particular 
class of injured workmen was therefore established by making 
this assessment upon all insurance carriers who were fortunate 
enough to have escaped the necessity of paying compensation after 
the death of the injured workmen. 

This law has been fully tested in the courts and has been upheld 
as constitutional. Looked at from this viewpoint, it must be said 
that the Travelers' Insurance Company when they issued their 
policy of insurance anticipated that in case of injury of an 
employee like Mr. Pettey, they might have two claims for com- 



452 State Depabtmjekt Repobts 

[Vol.20] State Industrial Commission 

pensation presented, one by the injured workman himself for 
compensation during his lifetime and another by his dependents 
for death benefits or compensation after his death. They have 
paid compensation during the lifetime of Mr. Pettey and they 
are now called upon to make a small payment in lieu of what would 
have been paid to his dependents if he had left any. I think, to 
construe the statute to make it necessary for them in this case to 
pay the hundred dollars, in pursuance of subdivision 7 of section 
15 of the Law, is only to carry out the contract of insurance as 
contemplated when it was made after the amendment. 

In this connection it is proper to note that the wording of that 
portion of subdivision 7 which is applicable to this case, is in 
exact harmony with this construction, for it provides that the 
payment shall be made for every case of injury causing death, " in 
which there are no persons entitled to compensation." The exact 
wording to meet the contention of the insurance carrier would 
seem to have been, " in which there is no person entitled to cowr 
penxation" While the matter is one of very close construction, I 
think the statute as it stands, has substantially the same meaning 
as though it read " the insurance carrier shall pay to the State 
Treasurer for every case of injury causing death in which there 
are ho persons entitled to compensation after the employee's 
death, the sum of $100." 

Like many other provisions of the Compensation Law, this 
clause can only be clarified and made certain by court decisions, 
and I advise that the insurance carrier's application for a refund 
of the money be denied, particularly as that is the only method 
by which a court decision could be had. 

Lynch, Sayer, Mitchell and Perkins, Commissioners, concur. 



Johnson v. Faribault Building Cobp. 453 



State Industrial Commission [Vol. 20] 



In the Matter of the Claim of Philip Johnson, for Compensation 
under the Workmen's Compensation Law, against Faribault 
Building Corporation, Employer; Royal Indemnity Com- 
pany, Insurance Carrier 

Case No. 59637 

(Decided July 0, 1919) 

Employee injured In using his motor cycle in taking superintendent of 
employer home — claim allowed. 

Claimant owned a motor cycle which he used in going to and coming 
from his work. On many occasions he used it in his employer's business. 
At the time of the accident he was returning to his work after having 
taken the superintendent of his employer home in his motor cycle, at the 
superintendent's request. The accident was caused by a collision with an 
automobile. Held, that the accident arose out of and in the course of 
claimant's employment. Failure to give written notice of the accident 
excused and the action of the deputy commissioner in disallowing the 
claim set aside and claim allowed. 

An award of compensation has been denied herein by our deputy 
on the theory that the accidental injuries did not arise out of and 
in the course of the employment. The action of the deputy com- 
missioner is now before us for review. 

The employer and insurance carrier contest the claim on two 
grounds, first, that the accident did not arise out of and in the 
course of the employment, and, second, that notice was not given 
to the employer as required in section 18 of the Compensation 
Law. The facts so far as material are set forth in the opinion. 

James Burke, Jr., for the claimant. 

F. J. O'Neill (Baruth Cohen, of counsel) , for the employer and 
insurance carrier. 

Sayer, Commissioner. — This is a claim for injuries arising 
out of a collision between an automobile and a motor cycle being 
ridden by Philip Johnson, the claimant, on the 10th of May, 
1918. The employer was engaged in a building operation on 



454 State Department Reports 

[Vol. 20] State Industrial Commission 

Staten Island, and the claimant was employed as an assistant 
foreman of carpenters on the job. He owned a motor cycle on 
which he used to ride to and from his work. It appears that on a 
number of occasions he used his motor cycle on the business of his 
employer, taking the superintendent to the bank, and elsewhere. 
Had the accident occurred on one of these occasions, there could 
be no reasonable ground of objection to the award. 

On the day in question, however, at about 6 o'clock in the 
evening, while the employee was still at the job, he was approached 
by the superintendent of the employer company, who said that he 
had missed his trolley car, and requested the claimant to take him 
home on his motor cycle. Claimant's version is that he and his 
foreman were planning the next day's work, and the superintendent 
asked the foreman if he would mind waiting while the claimant 
took him home. At the special instance and request, therefore, of 
the superintendent claimant took the superintendent home, and 
then started to return to the job to report to his foreman and to 
complete whatever work was to be done that night. While so 
returning he collided with an automobile a short distance from 
the job, and sustained very serious injuries out of which this 
claim arises. 

Had this accident taken place while the claimant was coming 
to work in the morning or going home at night, I do not think the 
claim would be under the act. DeVoe v. X. Y. State Rys., 218 
N. Y. 318. But in this case, the fair conclusion to be drawn 
from all the evidence is that claimant was still on the job, whether 
required so to be or whether he remained as an accommodation to 
his foreman, in the interest of the employer. While so on the job 
he is called upon by the superintendent to render a service for 
him. It is not an answer, I think, to say that claimant might 
refuse the request of the superintendent to take him home. It 
must be borne in mind that the superintendent was the highest 
person in authority on the job. He was in sole charge, and had 
the power to hire and discharge whom he wished. The claimant 
had a good job that paid him forty dollars a week and no doubt 
was anxious to keep it. As Judge Cardozo said, speaking for the 



Johnson v. Faribault Building Cobp. 455 



State Industrial Commigtion [Vol. 20] ' 

Court of Appeals, in Grieb v. Hanmerle, 222 N. T. 882 : " It was 
not mere friendship, it was the relation of employer and employee, 
that led the one to request the service and the other to render it" 
And again, " The inference is legitimate that it was not the 
comradeship of friends, but the tacit sanctions of a relation of 
power and dependence, which prompted the master's request and 
the servant's acquiescence." 

The application of this rule to the present case could not be 
questioned if the requested errand were of a nature clearly and 
unmistakably incidental to the employer's business. We do not 
know the reasons that prompted the request. He had never done 
so before. But he had requested the claimant to take him on 
other errands connected with the business. The superintendent 
was evidently in considerable of a hurry, he had missed his regular 
car home and did not wish to wait for the next. Whether his 
desire to get home quickly was connected with any other business 
of the corporation we do not know. But we may not indulge in 
speculations or presumptions unfavorable to the claimant. On the 
contrary, if there is any presumption it is in favor of the claim. 
§ 21. 

The case is in this respect somewhat analogous to those 
cases where an employee carries the employer's mail during the 
noon hour or going to or from work, awards in which have been 
sustained by the Appellate Division. Woolley v. Geneva Cutlery 
Co., 181 App. Div. 909; Swanick v. Saratoga Milling ft Grain 
Co., Id. 911. 

We may properly, I think, hold that the accident arose out of 
and in the course of the employment. 

Surely here it cannot seriously be contended that the employer 
and insurance carrier were prejudiced by failure to give written 
notice. The superintendent learned of the accident a few minutes 
after it happened and hurried to the place, reaching there just 
after the ambulance had taken claimant to the hospital. The 
superintendent was the person charged with the duty of making 
reports. The timekeeper who made up the reports for the super- 
intendent to sign hurried from the job to the scene of the accident 
and saw claimant before he was taken awav. The official in the 



456 State Department Reports 



[VoL 20] State Industrial Commission 

office in New York city who handled the reports also testified he 
knew of the accident. When a report was finally filed by the 
company, the statement was made over the signature of the presi- 
dent that the report had not been filed before because they did not 
believe the accident occurred during the course of the employment. 
There is no serious question as to any ox the facts concerning the 
happening of the accident and the injured employee was 
immediately removed to the hospital and received adequate medical 
services. Everyone connected with the work appears to have 
known about the accident. It is not at all like the cases of obscure 
injuries, pin pricks, slight scratches or particles in the eyes, where 
notice plays so important a factor. Here the employee was very 
seriously hurt and was for weeks in the hospital and it may fairly 
be held that he could not give written notice. 

The action of the deputy commissioner disallowing the claim 
should be set aside, the claim allowed and the case set for further 
hearing on the question of the extent of disability, at which time 
the claimant must appear for examination by the Commission's 
medical examiner. 

Lynch, Perkins and Mitchell, Commissioners, concur; Lyon, 
Commissioner, dissents. 



In the Matter of the Claim of Angelina Solomone, Widow, on 
Behalf of Herself and Minor Children, for Compensation 
under the Workmen's Compensation Law, on Account of the 
Death of Leonardo Solomone, against Deonon Contract* 
ing Company, Employer and Self-Insurer 

Case No. 351268 

(Decided July 12, 1919) 

Injury caused by negligence of third person — action prosecuted by injured 
employee in his lifetime and compromised without consent of employer is 
not a bar to the widow's claim for death benefits. 

The deceased in the course of his employment was injured by being 
hit by an automobile owned and operated by a third person. In his 
lifetime he brought an action against the owner of the automobile for 



SOLOMONE V. DEGNON CONTRACTING Co. 457 



State Industrial Commission [Vol. 20] 

negligenct and received judgment for $30,000, which he compromised 
for $7,500, and the judgment was satisfied. The action was brought 
and the judgment was satisfied without the consent of the employer. 
The widow now makes claim for death benefits. The employer con- 
tends that her claim is lost because her husband brought the action 
for his injuries and compromised it without the employer's consent, 
by reason of which the widow's claim for compensation is lost under 
section 29 of the Compensation Law. Held, that the widow's right 
to recover is original and not derivative; that nothing which her 
deceased husband did or neglected to do toward establishing his 
rights could interfere with hers; that section 29 of the Compensa- 
tion Law provides for the filing of claims in two instances where an 
employee is injured by negligence of a third person and afterwards dies 
from the effects of the injury. The injured employee may proceed first 
against the third person and if this action is successful he may come 
to the Commission to recover the balance of his compensation, if any, or 
he may file his claim for compensation with the Commission in the first 
instance thereby assigning his claim against the third person to the 
insurance carrier. His widow's rights are distinct and she may. first 
proceed against the third person reserving her right to come to the 
Commission for the balance of compensation or she may come to the 
Commission first for death benefits and assign her cause of action against 
the third person to the insurance carrier. An award should be made. 

Claim for death benefits is made by the widow of Leonardo 
Solomone on behalf of herself and minor children growing out of 
his death on January 22, 1919, consequent upon an accident 
happening to him in the course of his employment on May 7, 
1918. Mr. Solomone while in the regular course of his employ- 
ment was struck by an automobile owned and operated by a third 
party. The injury and its consequences is stated by the repre- 
sentative of the employer in the following words: "At the time 
of the accident he suffered and received injuries consisting of 
fracture of the base of the spine that paralyzed his lower limbs 
and also caused incontinence of urine. In January, 1919, he 
was operated upon for incontinence of urine, or some of the inju- 
ries, and during the course of the operation he contracted pneu- 
monia and died." 

The injured man after his accident brought an action against 
the third party for negligence and recovered a judgment for 
$S'0,000. This judgment was subsequently, in his lifetime, com- 
promised for the sum of $7,500, $6,000 being paid in cash and the 



458 State Department Reports 

..... , — . — , — __ — ^^^_ ^^^^^-^— 

[Vol.20] State Industrial Commission 

balance of $1,500 by the giving of promissory notes payable at 
intervals, a very considerable proportion of which notes have 
already been paid. After the compromise of the action, the pay- 
ment of the money and delivery of the notes, the judgment for 
$30,000 was satisfied of record. The bringing of this action 
and its subsequent trial and compromise of the judgment were all 
had without consent or acquiescence of the employer. • It is stren- 
uously insisted by the employer that because this action was 
prosecuted and compromised without its consent, the widow's 
claim for compensation is lost by reason of the provisions of 
section 29 of the Compensation Law. 

This is the only question to be determined, for it is admitted 
that the decedent's death was the result of his accident 

Claimant in person. 

* 

E. E. Bell and Frederick J. Flynn, for employer. 

Lyon, Commissioner. — The claim of the employer seems to 
be entirely without foundation. It proceeds entirely upon the 
erroneous theory, as it seems to me, that the widow's cause of 
action is in some way derived through the cause of action of her 
husband. Section 29 of the Compensation Law provides for the 
filing of claims with this Commission in two cases where an 
employee is injured by the negligence of a third party and dies 
from the injury. The first case is the claim filed by the injured 
employee himself. In that case he has his election to proceed 
first against the third party and then, if the action is properly 
carried through or compromised with the consent of the insurance 
carrier, to come to the Commission to recover the balance of his 
compensation beyond what he secures through his action against 
the third party; or, he might file his claim with the Commission 
and proceed for compensation in the first instance, thereby assign- 
ing his claim against the third party to the insurance carrier. 
That, however, is entirely distinct from the case of the widow of 
a deceased employee who wishes to claim either compensation or 
damages for the death of her husband, growing out of his employ- 
ment, but caused by the negligence of a third party. Here, too, 



SOLOMONE V. DeGNOTT CONTRACTING Co. 459 



State Industrial Commission [Vol. 20] 



there is an option to the claimant as to the method of procedure. 
She may elect to proceed first against the third party, reserving 
her right after the determination of that suit to come to the Com- 
mission for the balance of compensation, or she may come to the 
Commission for death benefits under the statute and assign her 
cause of action against the third party to the insurance carrier. 
These two claims, the one for compensation and the other for 
death benefits, are each original and distinct, the one from the 
other, and no proceeding had in one case can have any legal bear- 
ing, it seems to me, upon the claim in the other case. The situa- 
tion seems to me to be quite analogous to the not uncommon 
actions brought at common law, where a wife is injured by the 
negligence o